Brazil - Science Centers and Directed Research Phase I Project

1 -o r Document of The World Bank FOR OMCIAL USE ONY Report No. 12450-BR PILOT PROGRAM TO CONSERVE THE BRAZILLAN RAIN FOREST MEMORANDUM AND RECOMMENDATION OF THE DIRECTOR OF THE LATIN AMERICA AND THE CARIBBEAN DEPARTMENT I TO THE REGIONAL NICE PRESIDENT ON A PROPOSED GRANT FROM THE RAIN FOREST TRUST FUND IN AN AMOUNT EQUIVALENT TO US$8.5 MILLION TO THE FEDERATIVE REPUBLIC OF BRAZIL FOR A SCIENCE CENTERS AND DIRECTED RESEARCH PROJECT-PHASE I June 27, 1994 Pilot Program to Conserve the Braziian Rain Fore Environment and Agriculture Operations Division Country Department I Latin America and the Caribbean Regicnal Office - . I This document bas a restricted distruion and may be used by recipiens only in the performance of dwir official duties. Its contents may not otberwise be disclosed witku World Bank authorization.  CURRENCY EQUIVALENTS (As of March 31, 1994) Currency UJnit : Cruzeiro Real US$1.00 : CrR$ 913 CrR$1.00 US$0.0011 -.R$1 million : US$1,100 Currency Unit : European Currency Unit (ECU) US$1.00 . ECU 0.892 WEIGHTS AND MEASURES The metric system is used throughout the report. GOVERNMENT OF BRAZIL FISCAL YEAR January 1 to December 31  FOR OFFICIAL USE ONLY ACRONYMS ABC Agencia Brasilera de Cooperacao (Brazilian Cooperation Agency) CEC Commission of European Communities CNPq Conselho Nacional de Desenvolvimento Cientffico e Tecnoldgico (Council for Scientific rind Technological Development) COAP Support Coordination of Priority Programs CORPAM Comissao Coordenadora Regional de Pesquisas na AmazOnia (Regional Commission for Research in the Amazon) CPATU Centro de Pesquisa Agropecuaria do Trdpico Umido (Research Center for Agriculture in the Humid Tropics) CTC Comite Tecnico Cientffico (Scientific Committee) DCTEC Departamento de Cooperacao Tecnica (Department of Technical Cooperation) ECs Evaluation Commissions (Comites Assessores-CAs) EMBRAPA Empresa Brasileira de Pesquisa Agropecudria (Brazilian Agricultural Research Corporation) FINEP Financiadora de Estudos e Projetos (Agency for Financing of Studies and Projects) FUAP Formulario Unico de Apresentacio de Propostas (Grant Application Form) GEA Grupo de Avaliaclo do PADCT (Review and Advisory Group) G-7 Group of Seven IAG International Advisory Group IBAMA Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renovaveis (Brazilian Institute for the Environment and Renewable Resources) IGSM International Group for Scientific Monitoring (Grupo Internacional de Acompanhamento Cientffico-GIAC) INPA Instituto Nacional de Pesquisas da Amazonia (National Institute for Amazon Research) LCB Local Competitive Bidding LIB Limited International Bidding MCT Ministerio de Ciencia e Tecnologia (Ministry of Science and Technology) MIS Management Information System MMA Ministerio de Meio Ambiente e da Amazonia Legal (Ministry of Environment and Legal Amazon) MPEG Museu Paraense Emilio Goeldi (Emilio Goeldi Museum of Para) MRE Ministdrio de Relac6es Exteriores (Ministry of Foreign Relations) Ths document has a restricted disbution and may be used by recipien only in the peformn of their officil duties. Its cons may not othervise be disclosed without World Bank authon7rf  ACRONYMS (cont.) NGO Non-Governmental Organization ODA Overseas Development Administration PADCT Programa de Apoio ao Desenvolvimento Cientffico e Tecnoldgico (Support Program for Scientific and Technological Development) PIU Project Implementation Unit PPD Programa de Pesquisa Dirigida (Directed Research Program) RHAE Prograrma de Desenvolvimento de Recursos Humanos em Areas Estrategicas (Program for Development of Human Resources in Strategic Areas) RNP Rede Nacional de Pesquisa (National Network for Research) RFI Rain Forest Trust Fund SEAIN Secretaria de Assuntos Internacionais (International Affairs Secretariat) SECOP Secretaria de Coordenacao de Programas (Secretary of Program Coordination) SOE Statement of Expenditures SUDAM Superintend8ncia do Desenvolvimento da Amaz8nia (Superintendency for the Development of Amazonia) TOR Tern of Reference TS Technical Secretarat (Secretaria TdcnicaST)  BRAZIL PnALT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST SCIENCE CENTERS AND DIRECTED RESEARCH PROJECT-PHASE I TABLE OF CONTENIS Page No. GRANT AND PROJECT SUMMARY ........................ i L BACKGROUND .1 The Setting .1 Lessons Learned from Previous Bank Involvement .. 5 II. THE PROJECT .. 7 Project Objectives .. 7 Project Description .. 7 Project Costs and Financing .. 11 Project Implementation .. 11 Project Sustainability .. 15 Rationale for RFT Funding .. 16 Environmental Aspects .. 16 Project Benefits .. 16 Risks .. 16 m. AGREEMENTS REACHED AND RECOMMENDATION . . 18 SCHEDULE A .. 20-21 SCHEDULEB .. 22-23 SCHEDULE C .. 24 (coniue next page) This repor. is based on the findings of an appraisal mission which visited Brazil in September-October 1993. Mission members were Claudia Sobrevila (mission leader), Alberto Ninio (Environmental Lawyer), Alcyone Saliba (Education Speciaist), Ellen Newfield (information Systems Specialist), Jeffrey Richey (Amazon Ecologist), Ruth Norris (Institutional Development Specialist), Susanne Renner (Botanist and Museum Speciaist), Michael Goulding (Amazon Ecologist) and Sergio Dompieri (Architect). The mission was joined by Eric Stoner (USAID) and Ian Hunter (ODA) who represented co-financing agencies. Country Department Director, Rainer B. Steckhan. Division Chief, Kreszentia M. Duer.  IV. TECHNICAL ANNEES .................... 25 Annex 1: DESCRIPTION OF THE TWO INSTITUTIONS 26 Annex 2: DIRECTED RESEARCH COMPONENT - CALL FOR PROPOSALS. 30 Annex 3: SUMMARY OF THE OPERATIONAL MANUAL ... 39 Annex 4. PROGRESS ON IMPLEMENTATION OF STRATEGIC PLANNING . 45 Annex 5: LONG-TERM STRATEGIC DEVELOPMENT OF THE SCIENCE CENTERS .56 Annex 6: KEY PERFORMANCE TARGETS FOR MONITORING AND EVALUATION .64 Annex 7: REPORTS AND DOCUMENTS IN PROJECT FILES .. 92 IBRD MAP No. 25520  I BRAZIL PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FORESI SCIENCE CENTERS AND DIRECTED RESEARCH PROJECT-PHASE I GRANT AND PROJECT SUMMARY Grantor: Rain Forest Trust Fund (RFM ) Redpient: Federative Reput;.c of Brazil Benciaries: Ministry of Science and Technology (MCI) National Iistitute for Amazon Research (INPA) Emilio Goeldi Museum of Para (MPEG) Research Institutes and Organizations, Universities and Researchers Amount: US$8.5 million equivalent (RFT) Terms: Grant Fnancing Plan: Source TOTAL (US$ million equivalent) Rain Forest Trust Fund (grant) 8.5 CEC (grant) 5.4 United Kingdom (tech. assist.) 0.7 Brazilian Government 0.5 Total 15.1 Eoonomc lRate of Return: N/A Map: IBRD No. 25520  MEMORANDUM AND RECOMMENDATION OF THE DIRECTOR OF THE LATIN AMERICA AND THE CARIBBEAN DEPARTMENT I TO THE REGIONAL VICE PRESIDENT ON A GRANT FROM THE PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST TO THE FEDERATIVE REPUBLIC OF BRAZIL FOR A SCIENCE CENTERS AND DIRECTED RESEARCH PROJECT-PHASE I 1. I submit for your approval the following memorandum and reconnmendation on a proposed grant from the Rain Forest Trust Fund (RF`) to the Federative Republic of Prazil for US$8.5 million. The grant would finance a Science Centers and Directed Research Project-Phase I to promote the generation and dissemination of scientific knowledge relevant to conservation and sustainable development activities in the Amazon region. This project is part of the Pilot Program to Conserve the Brazilian Rain Forest, which is funded by the Group of Seven countries, the European Union, and the Netherlands, and administered by the World Bank. I. BACKGROUND The Setting 2. The Brazilian Amazon region contains the largest extent of tropical rain forest in the world and contributes 20% of the global river discharge into the world's oceans. Brazilian Amazon rain forests are a major carbon store, and their destruction would occasion the release of greenhouse gases that could affect the global climate. The rich forest and aquatic ecosystems contain a large share of the world's biological diversity and, while not fully known, the potential uses of Amazonian naural products are significant and increasing. Conserving the Amazon rain forest while using its resources sustainably would provide significant benefits to Brazilians and to the global community. 3. Recent economic and demographic charnges in the Amazon region guided by inadequate technologies are leading to rapidly accelerated land use changes that imply loss of natural diversity, environmental degradation and the threat of climatic changes. Ignorance of the likely consequences of non-sustainable production systems for the environment has contributed to decisions in the past which have led to accelerated deforestation. Policy-making and investment decisions are constrained where information is lacking on the economic value of the forest, its products and the environmental services it provides. Increased investment in priority research in the Amazon region could improve policy analysis in the public sector and stimulate the development of less damaging technologies for the private sector to exploit the region's natural resources. By strengthening the research capability of institutions in the region and drawing more highly educated individuals into the region, it may also be possible to elevate the level of public debate on salient policy issues. 4. The Pilot Program to Conserve the Brazilian Rain Forest was initiated at the request of the Group of Seven (G-7) at the Houston Summit in 1990. Individual projects are financed by the Rain Forest Trust Fund (RET), which was established by Resolution 92-2 of the Bank's Executive Directors in March 1992, and by associated bilateral co-financing (all on grant terms). The Program is intended to support an integrated set of projects that will contribute to a reduction of the rate of deforestation  2 in the Amazon rain forests while using its resources sustainably. These projects fall within three broad sub-programs: (i) strengthen the capacity of the public sector to set and enforce sound environmental policy; (ii) improve management of special protected areas; and (iii) increase research and the use of environmentally benign technologies in the Amazon. For the third sub-program, the Brazilian government proposed a long-term strategy for science and technology activities in the Amazon under the Pilot Program that is presented in the progress report of the October 1991 World Bank/Commission of European Communities (CEC) technical mission to Brazil. The activities under this long-term strategy were estimated at US$48 million, and would be implemented in separate phases. The present project will support Phase I of this long- term strategy and constitutes the first commitment under the RFT. As part of this strategy, the United States and the Brazilian Government are expected to finance a US$5 million Emergency Assistance for two Science Centers in the Amazon region. Additional phases could be financed to reacii this strategy as more funds are committed to the Pilot Program. 5. Science and Technology Funding. Brazil has a long tradition of giving attention to the role of science and technology in economic development. Over the past 25 years, Brazil has developed the largest system of Science and TeIhnology in Latin America. The country's research and development spending in relation to GNP is 0.7%. This figure is similar to that of other semi-industrialized countries, although lower than most industrialized c-untries. In absolute terms, whereas the United States invests approximately US$121 billion and Japan US$46 billion per year in research and development, Brazil invests US$3.4 billion. Science research institutions in the Brazilian Amazon receive US$103 million per year in direct funding from the Treasury and US$45 million in grant funding through different government grant agencies. This indicates that science and technology investment in the Amazon is 4% of the investment for the whole country. 6. Brazil lags noticeably behind other industrialized countries in human development. Brazil has fewer scientists and engineers per capita engaged in research and development than many other developing countries, and the disparity is even greater in frontier areas such as the Amazon region. In 1989, 2213 scientists and university professors in the Brazilian Amazon had master's or doctoral degrees representing only 4.6% of all Brazilian high level researchers. Research expertise and capacity in the Amazon, must be increased. 7. Since 1980, development and maintenance of Brazil's capacity in scientific research has deteriorated due to declining and variable funding and lack of effective and transparent decision-making in the awarding of scientific research grants. Many institutions face deteriorating or out-of-date equipment and infrastructure due to this reduced funding. Libraries and information centers have suffered from budget cuts as the costs of international journal subscriptions and storage conditions insulated from the humid climate became prohibitive. Financial support for library resources in the Amazon region is less available than for Sao Paulo, Rio de Janeiro and Minas Gerais. Support to scientific collect'.ns in museums and research centers is inadequate to store and study the immense diversity of the Amazon region that includes 30,000 plants, 3,000 fish, 900 bird species, other vertebrates and invertebrates, and human archeological and anthropological resources. These collections provide the technological infrastructure that make environmentally sound development feasible.  3 8. In 1985 tae government initiated the Support Program for Scientific and Technological Deielopment (PADCT), partly funded by a Bank loan (No. 2489-BR), to support basic research through a competitive grants program administered by the Ministry of Science and Technology (MCT) and four science research funding agencies. In 1990, the Bank approved another loan for a second phase of PADCT (Loan 3269-BR). Although the second loan includes support for a sub-program on environmental sciences, because PADCT is national in scope, and Amazonian research institutions are weak in relation to institutions in the Southeast and South of Brazil, few PADCT resources have been available for the research needed to improve natural resources management in the Amazon. 9. In order to builk _ 'itional scientific capacity, the government supported in 1989 the institutional str.-igthening of the Brazilian Agricultural Research Corporation (EMBRAPA) as part of a larger agricultural project funded partly by the Bank. Although the loan inc!udes support for some Amazonian research nuclei of EMBRAPA such as the Research Center for Agriculture in the Humid Tropics (CPATU), no resources from ihis loan are available for non-agricultural scientific institutions in the Amazon. The proposed project would address the need for the development of scientiflc and technological expertise in the Amazon, and the strengthering of Amazon research infrastructure. 10. Strategy for Science and Technology in the Amazon. In 1989, the government created the Regional Commission for Research in the Amazon (CORPAM) to provide MCT with general directives and strategies to enhance scientific and technological development in the Amazon. CORPAM is an independent commission comprised of representatives from EMBRAPA, the Superintendency for the Development of Amazonia (SUDAM), the National Institute for Amazon Research (INPA), the Council for Scientific and Technological Development (CNPq), the Agency for Financing of Studies and Projects (FINEP), the Brazilian Institute for the Environment and Renewable Natural Resources (IBAMA), non-governmental organizations (NGOs), private groups, and universities. In 1991, CORPAM prepared a Plan for Science and Technology in the Amazon Region. The plan calls for four major strategies to improve science capacity in the Amazon: (i) recruitment and retention of qualified staff in the region; (ii) clear definition of research priorities in the region; (iii) improvement of networking capabilities and enhancement of the flow of information among research institutions; and (iv) improvement and rehabilitation of the infrastructure for research. MCT has committed itself to implementing these strategies in an explicit way: (a) a scholarship program called the Program for Development of Human Resources in Strategic Areas (RHAE) has allocated a specified number of scholarships for the Amazon region; (3) MCT has committed funds for several workshops that have resulted in a series of recommendations about the research priorities in the Amazon; (c) in August 1992, MCT, through "Portaria" No. 475, constituted a High-level Commission to develop a strategy to strengthen INPA; (d) several centers in the Amazon are currently being connected to the National Network for Research (RNP) which is coordinated by CNPq (e.g. INPA and the Emilio Goeldi Museum of Para (MPEG)). The present project builds on these strategies. 11. Institutional Framework. In 1988, the Amazon region had 22 higher-level education centers, comprising eight universities and 14 schools or federations. ITe institutions and universities in the Amazon depend principally on federal funding.  4 Many governmental research institutions in the Amazon have had a short life span, due to limited funding support from the federal government. During the last decade the nuumber and influence of non-governmental organizations involved in research, extension and social and environmental activism has grown in Brazil and in the Amazon region. For the first time, research is developing outside the preserves of state and federal institutions. Dependent on short-term funding sources, these organizations must compete effectively for domestic and foreign funding to survive. As a result, they tend to be small, with low overhead and a strong project orientation. The research-oriented NGOs represent a model that combines high professional standards with the flexibility to adapt to the needs of specific research projects. They foster inter-institutional collaboration and complement the role of federal research institutions. 12. Institutional Reform. In 1992, MCT conmmissioned a study on Science and Technology Policy in Brazil as part of PADCT II (Loan 3269-BR). The results of the study, published in October 1993, indicate the need for science development in the following areas: institutional reform, technology and applied sciences, basic science and education, international cooperation, information and knowledge dissemination and goal-oriented projects. The report suggests that research institutions and public universities should not be run as sections of the civil service. They need to have the flexibility to set priorities, seek resources from different public and private agencies, and establish their own personnel policies. Tne report also stresses that no research institution receiving public support, and no government program providing grants, feliowships, institutional support or other resources to the Science and Technology sector, should be exempt from having clear and well-defined procedures of peer evaluation, combined, when necessary, with other types of economic and strategic assessments. Peer review procedures should be strengthened by the federal and state governments, shouL Le free from pressures of regional, professional anL institutional interest groups, and should acquire a strong international dimension (for instance, research proposals could be easily distributed to international referees through electronic mail). The present project builds on these recommendations. 13. A serious constraint to effective research in the Amazon is the absence of a solid research institutional base to serve a critical mass of qualified scientists. Directed research funding alone cannot address this constraint in a region like the Amazon where research is underdeveloped. Recognizing this, MCT decided to initiate a pilot experiment to strengthen selected research institutions. MCT chose two established research institutions in the Amazon: the National Institute for Amazon Research (INPA) in Manaus, and the Emilio Goeldi Museum of Para (MPEG) in Belem. These institutions were selected because of their long tradition of sound environmental and socio-cultural research and because of their complementary geographical focus-MPEG in the eastern Arnazon and INPA in the western Amazon, and their technical focus--MPEG in natural sciences and socio-cultural studies and INPA in ecological and technological studies. These two Science Centers have suffered in recent years due to the chronic macroeconomic crisis in Brazil. The level of funding at INPA and MPEG has been variable during the period from 1982 to 1991 (Annex I). Funding in both institutions reached its lowest level in 1984, 1985 and 1986. INPA and MPEG have been able to raise on average 11% and 32% respectively in funds from outside sources, especially from international sources. In terms of expenditures, in 1989, US$9.8 million was allocated to MPEG from the Pederal Govermnent, of which US$7.3 million went for salaries and US$2.5 million  5 for operating costs and maintenance. For the same year, INPA received US$26.4 million, of which US$23.4 million went for salaries and US$3 million for operating costs and maintenance. For more details on the two Centers, see Annex 1. 14. In May 1992, in response to a request from the Brazilian government, the US National Research Council of the National Academy of Sciences selected a Scientific Advisory Group to assist the Brazilian government with an assessment of INPA and MPEG and to identify actions for developing these institutions as model Science Centers in the Amazon rxgion. The niajor def -encies found by the Advisory Grw,-;i were: (i) lack of clear institutional guidelines ai. focused research goals; (it) low salaries and exodus of best qualified staff; (lii) lack of administrative efficiency in research administration; (iv) lack of coordinated activities with other institutions; (v) deteriorated infrastructure and lack of facilities for field research; (vi) lack of necessary equipment; and (vii) lack of a performance evaluation system. The proposed project would address these deficiencies through the Science Centers component. 15. MCT's institutional strategy is to provide to these two pilot institutions long- term continuous support to bring them back to the level of excellence and competence that won them international recognition in the past. Several new approaches to institutional strengthening could be tested in these two institutions, such as increased autonomy and transparency in decision making, incentive systems based on demonstrated performance and diversification of funding sources. If these new approaches prove to be successful, other centers could be added to the program in the future. Resources would be provided to the institutions, based on demonstrated performance, as an incentive to greater research productivity. In addition, financial support through the project would restore the Centers' basic infrastructure and equipment but would not substitute for the present level of funding from the Federal Government. Lessons Learned from Previous Bank Involvement 16. Bank lending for science and technology development has risen rapidly since 1980. Both the number of projects and level of financing reflect an increased focus in this area. A Background Paper, "World Bank Lending for Science and Technology: General Operational Review" (PHREE No. 92/51R, issued in March 1992), examined 75 Bank loans with explicit science and technology objectives and components. Six projects, one of which is the Brazil Science Research and Training Project - PADCT II, are presented as case studies. Several lessons and experiences are sumnmarized in the paper and include the need to: (i) assess current and future science and technology needs for development in order to plan resource development and allocation among research priorities; (ii) promote opportunities for intr-institutional and interdisciplinary collaboration of the extended local scientific community; (Oii) monitor and evaluate project implementation and outcomes; (iv) introduce incentives such as grants for research, support for facilities, monetary rewards, increased professional status, travel and further training, related to efficient, appropriate productivity, primarily by basing access to resources on demonstrated performance; (v) promote access to information resources; (vi) provide basic infrastructure and equipment needs in order for science and technology projects to prosper; (vii) support the vital role of the private sector in science and technology education and research; (viii) link  6 research and teaching to assure relevance; and (ix) move to decentralized self- management of education and research. 17. In addition, past experiences of the Bank in institutional development are summarized in a paper by Alain Tobelem (June 1992) entitled "Institutional Development in the Latin America and Caribbean Region: Lessons of Experience and Recommendations for Improvement". Major recommendations relevant to the proposed project include: (i) the importance of basing project design on a thorough institutional needs assessment; (ii) the importance of establishing clear monitorable indicators of project success; and (iii) the importance of an annual review process as a setting for evaluating project performance and agreeing on necessary adjustments. 18. The Science Centers and Directed Research project contains a number of unique and innovative features and has also incorporated several of the lessons learned: (i) the resources will go to support science -nd technology in a region where research is underdeveloped; (ii) funding will be applied through a competitive and transparent process based on merit and demonstrated performance. Under the present project the competitive and transparent process used under PADCT II will be used in the Directed Research grants program and will be expanded by applying it within institutions; (iii) PADCT focuses primarily on providing funding to individual research projects and to a lesser extent in solving institutional bottlenecks that impede science development, while the Science Centers component addresses the need to change and build new institutional models and mechanisms that enable science to prosper. The two chosen Centers will serve as a pilot case where many new ideas will be tested (more institutional autonomy, staff performance evaluation system, incentive systems based on demonstrated performance, diversification of funding sources, etc.). If successful, other centers could be supported in the future; (ho) the project is demand-driven and builds in specific linkages between applied research and land use managers in both project components. Dissemination mechanisms have been built at different stages of project execution. Scientists need to advise/interact more actively with land and natural resources users in order to understand the problems they face and address their concerns; (v) multisectoral or multidisciplinary research will be enhanced (e.g. social, biological, economic and agricultural research will be supported). Improved land use requires an approach that recognizes the characteristic cultural and biological diversity of these lands, respects their complex ecological processes and promotes cooperation among biologists, agricultural scientists, and social scientists. The easing of rigid disciplinary boundaries is of special importance in the Amazon region.  7 II. THE PROJECT Project Objectives 19. The objective of the project is to promote the generation and dissemination of scientific knowledge relevant to conservation and sustainable development activities in the Amazon region. This goal would be pursued through a two-pronged strategy: (i) support for a grants program for funding research projects on a competitive basis In the Amazon region; and (ii) strengthening of two established research institutions of the Amazon, INPA and MPEG. Project Description 20. The project would consist of two components, a Directed Research component and a Science Centers component. 21. Directed Research (Total estimated cost: US$5.7 million, including contingencies and financial administration fees). This component would support a grants program to fund research projects evaluated and selected on a transparent competitive basis and responding to established priorities. Qualified grantees would include scientists from universities and other research institutions, both public and private, located in the Amazon or working in close collaboration with an Amazon- based institution. Research priorities would respond to gaps in the research currently being carried out and to the demand for research results by natural resources users and decision makers. Research priorities for the program were identified in May 1993 and December 1993 by public deliberation at a workshop led by CORPAM, and were supplemented by additional expert consultancies with the workshop participants, other members of the scientific community and the Technical Secretariats of other Pilot Program Projects. The following four broad sub-program areas were identified: (I) Amazonian ecosystems' structure and function (e.g. impact of land use changes on ecosystem function, biodiversity assessments and conservation strategies); (ii) sustainable natural resource management (e.g. baseline studies on productivity of different land and water use systems, studies on new or traditionally used forest products with potential economic value); (iii) socioeconomic and cultural systems (e.g. cultural and social base for the sustainable use of Amazonian environment, impact of pollution on health); and (iv) low environmental impact infrastructre (e.g. adaptive research on renewable energies for direct use in the Amazon, studies on transport modes with low environmental impact). The priorities for the first call for proposals will be limited to the three first sub-program areas mentioned above for Phase I of the project. The first call for proposals has been found satisfactory to the Bank (Anm ). At negogiations. agreement was reached that the first call for proposals will be issued thirty days after Grant effectiveness and if all the funds are not committed after the first call, a subsequent call for proposals satisfactory to the Bank will be issued six months after the first call has been closed (para. 45(a)). 22. Evaluation Commissions (ECs), composed of highly qualified scientists, would use two main overall criteria for evaluating proposals and making recommendations: priority research and scientific merit. To assess whether a research proposal is a priority, the Evaluation Commissions would determine if the proposal fits one of the  8 pre-established priorities presented in the call for proposal. To assess scientific merit, the following specific criteria would be used through a point system: (a) innovative character of research; (b) sound methodology; (c) qualifications of applicants; (d) relevance of the research to development; (e) adequate infrastructure for the research proposed. The operational rules for the Directed Research and for the Science Centers components, which are incorporated into the Operational Manual and summarized in Annex 3, have been found satisfactory to the Bank. At negoliations, agreement was reached that project implementation (Directed Research and Science Centers components) will be govemed by the agreed Operational Manual (para. 45(b)). 23. Individual grants will not be larger than US$300,000 for two years. Each grant proposal could include funds for equipment, supplies, travel expenses, contractual services, training, scholarships, and publication costs. The project would also finance the administrative costs of running the grants program, including fees for consultants and reviewers, travel costs, dissemination, and monitoring and evaluation. Cost estimates for the Directed Research component are included in Schedule A. 24. Sfcince Centers (Total estimated cost: US$9.4 mi;lion, including contingencies and financial administration fees). For INPA and MPEG, this component would: (a) strengthen the institutional management and administration functions; (b) support the rehabilitation and expansion of research infastructure and equipment; (c) increase human resource capacity in scientific research and education; (d) disseminate research results; (e) provide technical assistance in science and dissemination management from ODA; (f) provide technical assistance to the project implementation unit; and (g) support to key policy studies and plan at MPEG. (a) Institutional management and administration. In order to strengthen the institutions' overall administrative and management functions, the following activities would be supported in both institutions: (i) implementation of a regular system of planning, monitoring, and evaluation. As part of this activity, a strategic planning exercise to define research priorities and mission statements has been underway at INPA and MPEG since March 1993 and preliminary results were reviewed by the appraisal team. INPA's final report was received at the end of February 1994 and MPEG's report was received at the end of May 1994. Progress to date on the results of the strategic planning is included in Annex 4. As a continuation of the strategic planning exercise, an external evaluation of the two institutions would be carried out by the time of the mid-term review. The goal of this evaluation would be to review the structure and functions of the institutions related to the project and to determine the difficult issue of which research areas may need to be phased out given the overall mandate of the two institutions (para. 30). The results and actions from these evaluations would have to be taken prior to appraisal of a Phase II of the project; (ii) improvement of international and national scientific exchange and technical cooperation; (iii) improvement of administrative procedures, including the preparation of new procedures for personnel and financial management and development of a training program for administrative staff; and (iv) strengthening of a development office responsible for fundraising activities and to assure long-term support of the institutions. At negotiations, agreement was reached that the two institutions will maintain the development office and the scientific exchange and technical  9 cooperation office with structure, functions and responsibilides satisfactory to the Bank and that the management and staff will be adequate in numbers and qualifications (para. 45(c)(i)). In addition to these activities, the project has carried out a pre-investment study for an institutional reform of research instituttions. This study was reviewed by the appraisal team and a brief summary is presented in Annex 5. (b) Rehabilitation and expansion of research infrastructure and equipment. In order to up-grade the research infrastructure and equipment that have deteriorated in recent years, this sub-component would support the following activities at INPA: (i) expansion and furnishing of laboratory space for the Aquatic and Ecology Departments; (ii) expansion and furnishing of space for zoological and botanical collections; (iii) installation of a fire control system in the library, herbarium and zoological collections building; (iv) improvement of codlections maintenance and management; (v) modernization and equipment of the library; (vi) modernization of computer and network capabilities for researchers; (vii) acquisition of boats and vehicles for field research; (viii) rehabilitation of two existing floating field stations in the floodplains and one station near Manaus (ZF-2); and (ix) improvement of research equipment utilization and acquisition and refurbishing of research equipment. The following activities would be supported at MPEG: (i) improvement of the basic electric, telephone and water services at the Research Campus; (ii) expansion of the zoology collection building and installation of new insulating roofs for the zoology collections building (birds/reptiles and entomology buildings) and anthropological collections building; (iii) acquisition of most needed research equipment and materials; and (iv) modernization of computer capabilities and development of a well-designed information system to promote communication between individuals and disciplines. The sub- component would also support at both Centers the consolidation of the engineering/maintenance unit to provide high-quality services for the maintenance of buildings and equipment. At negotiations, agreement was reached that a plan for the maintenance of buildings and equipments at both Centers, acceptable to the Bank, will be prepared six months after Grant effectiveness and carrded out during project implementation (para. 45(d)). (c) Improve human resource capacity in scientific research and education. To secure highly qualified research staff in both institutions, incentives must be created and applied on the basis of demonstrated performance. To accomplish this objective, the following activity would be supported in both institutions: (i) development of a staff performance evaluation system dtat would be implementied at the beginning of the project and would be used to apply the different incentives described below. In addition, the following activities would be supported at INPA: (i) development of an exchange program for researchers at the Ph.D. level to make them competitive at the national and international levels; and (i) support to the INPA graduate program by providing resources to students for field work and to complete their theses. Support to the graduate program would also include equipment to improve classroom and laboratory conditions for students. At MPEG, the following activities would be supported: (i) development of an international exchange program for Ph.D. level staff; (ii) development of a grants program for young scientists; (iii) development of a training program for curators; and (iv)  10 development of a workshop at the Caixuana reserve. At negotiations, agreement was reached that the procedures to evaluate staff performance at INPA and the Goeldi Museum will be defined within nine months from Grant effectiveness and adopted thereafter (para. 45(e)). (d) Dissemination of research results. In order to promote the dissemination and use of the generated research results, the project would finance the following activities at INPA: (i) publication of four issues of the scientific journal, "Acta Amazdnica" and of two scientific books; (ii) publication of booklets and semi-scientific books on applied technology research and extension services; (iii) production of a high-quality film/video to disseminate research outputs at INPA and its role in conserving and managing the Amazon rain forest; (iv) support for an international congress on Amazon fisheries; and (v) support for the consolidation of an in-house publication office. At MPEG, the following activities would be financed: (i) improvement of the library collections, equipment and management; (ii) support for the in-house publication office; (iii) production of six issues of the museum's environmental bulletin; and (iv) preparation of a master plan for refurbishing MPEG's major exhibits hall. (e) Technical assistance from the Overseas Development Agency: The Overseas Development Agency has recommended that the following activities be funded under the project in both institutions: (i) study visits by senior staff and training course in science development; (ii) support to the production of promotion and dissemination materials; (iii) provision of a CD reader, computer and abstract disks and training on its operation; (iv) provision of advice and training in developing information from the collections of relevance to development. (f) Project implementation support: This sub-component would include support to the Project Implementation Units (PIU) at INPA and MPEG for technical services, including contracting procurement services and an external auditor and monitoring and evaluation support. The sub-component would be financed by the counterpart funds. (g) Policy studies and strategic plans: In addition, the project would finance with counterpart funds the following policy studies and plans at MPEG: (i) preparation of a 5-year strategic plan for the dissemination activities at the Museum; (ii) preparation of a detailed scientific policy and plan for the institutions; and (iii) preparation of a plan to restructure the zoobotanical park. 25. Specifically, the Science Centers component would finance technical assistance, training, workshops, limited renovation and extension of facilities, library and collections resources, and office, electronic, field and laboratory equipment. Cost estimates for the Science Centers component are included in Schedule A.  11 Project Costs and Financing 26. The present project constitutes the first phase of the Science Centers and Directed Research project and its total costs have been estimated at US$15.1 million. The project would be financed by the Rain Forest Trust Fund (RFT) (US$8.5 million), the Commission of European Communities (CEC) (US$5.4 million equivalent), the United Kingdom (US$0.7 million equivalent) and by the Brazilian Government (US$0.5 million). Co-financing would be provided on a parallel basis. The CEC funds would be disbursed through a Trust Fund expected to be established in the Bank. The Trust Fund agreement between the CEC and the Bank was signed on June 9, 1994. Funds from the United Kingdom would be provided as technical cooperation directly to the Centers through the Overseas Development Administration (ODA). Financing plans for each project components are shown in Schedule A. Additional phases could be financed to reach the long-term strategy as more funds are committed to the Pilot Program (see Annex 5). Project Implementation 27. Project Administration. The project management unit or Technical Secretariat (TS) would be under the overall coordination of the Secretariat of Program Coordination (SECOP) of MCT and would be headed by its Secretary. The TSs main responsibilities would be to: (i) coordinate and supervise the implementation of all the components of the project according to the Grant Agreement and the Operational Manual; (ii) execute the Directed Research component of the project according to the Operational Manual; (iii) ensure that the recommendations of the Pilot Program International Advisory Group (1AG), CORPAM and the International Group for Scientific Monitoring (IGSM) (to be established for the project) are incorporated during project implementation and review; (iv) represent MCT in the Brazilian Pilot Program Coordinating Commission and report to them on progress to date; and (v) prepare monitoring and evaluation reports on the basis of information provided by INPA, MPEG, the Financial Agent and the beneficiary institutions (see Annex 3 for more details). At negotiations, agreement was reached that MCT will maintain a TS with responsibilities, structure and functions satisfactory to the Bank and with management and staff in adequate numbers and with adequate qualifications (para. 45(c)(ii)). To carry out the project, the Ministry of Environment and Legal Amazon (MMA), coordinator of the Pilot Program, would enter into legal agreements with MCT and the Financial Agent. MMA will have the responsibility for the overall coordination, MCT will be responsible for technical supervision and execution and the Financial Agent for the financial execution. Prior to negopiations, the Bank was informed that the Agency for Financing of Studies and Projects (FINEP) (MCT's Financial Agent) would be the financial agent for the Recipient (para. 44). At negotiations, a draft agreement between MMA, MCT and FINEP was reviewed by the Bank. The signing of a satisfactory agreement between MMA, MCT and FINEP is a condition of Grant effectiveness (para. 46(a)). FINEP will enter in agreements with INPA, MPEG and the sub-project institutions. The signing of satisfactory agreements between FINEP and INPA and between FINEP and MPEG is a condition of Grant effectiveness (para. 46(b)).  12 28. Directed Research. Implementation of the Directed Research Program would build on the experience of PADCT I and II (para. 8). Detailed descriptions of the implementation strategies and rules of the program are found in the Operational Manual approved by the Bank and summarized in Annex . The Operational Manual includes: (i) an annual operating plan; (ii) guidelines for peer reviewers, contained in a document entitled "General Orientations Regarding the Organization and Operation of the Evaluation Commissions"; (iii) model of minutes to be used by the scientific review panel (ECs); (iv) profiles of the representatives to be added to the International Group for Scientific Monitoring (see para. 30); (v) terms of reference (with membership profiles) for the ECs; and (vi) format for submission of the annual implementation progress report (APR). Based on the research priorities defined by CORPAM, the TS would issue calls for proposals and appoint independent Evaluation Commissions (ECs) to review the research proposals according to strict selection criteria and to recommend proposals for funding. Approved research projects would be contracted by the Financial Agent, according to terms set in the model grant agreement between the Financial Agent and Beneficiaries (para. 27). 29. Science Centers. For the Science Centers component, the director of each Center would be responsible for overall project administration and policy direction. The directors would report to the Technical Secretariat according to the terms established in the implementation agreement between MMA, MCT and FINEP and in the agreements between FINEP and INPA and FINEP and MPEG (para. 27). Each Science Center would establish a Project Implementation Unit (PIU) to carry out the day-to-day work. The two Science Centers PIU's would be responsible for planning and coordinating technical activities and for monitoring and evaluation of project results. At neiations, agreement was reached that each Center will maintain a PIU with responsibilities, structure and functions satisfactory to the Bank and with management and staff in adequate numbers and with adequate qualifications (para. 45(c)(iii)). The satisfactory establishment of the PIUs is a condition of Grant effectiveness (para. 46(c)). At ngeoiaons, agreement was reached that project progress will be monitored against the performance targets specified in Annex (para. 45(f)). The two Science Centers' PIUs would be organized so that implementation of each project component would be headed by one qualified and experienced staff that would assume responsibility for attaining the objectives and proposed project outputs in a timely manner. In addition, staff from the planning, financing and administrative departments of the institutions would be part of the PIU and would be responsible for procurement under Bank rules and financial reporting. INPA and MPEG's directors would also seek advice from the existing Board of Directors (CTC) on the overall project implementation strategy and would ensure that the recommendations of the International Group for Scientific Monitoring (IGSM) and the IAG are incorporated during project implementation and review. 30. Monitoring and Evaluation. The TS would be responsible for monitoring and evaluating each component of the proposed project. For the Science Centers component, progress would be measured according to the performance targets presented in Annex . For the Directed Research component, the TS will use a standard form for monitoring and evaluating projects. This form, agreed with the Bank, has been incorporated into the Operational Manual. The TS will be assisted by an International Group for Scientific Monitoring ([GSM) that would be responsible for carrying out an independent evaluation of the Science Centers and Directed Research Project. The IGSM would meet annually and would submit to the TS detailed  13 evaluation reports of the components of the project and the impact of the investments in the Amazon region. The IGSM would also be responsible for visiting a sample of research projects funded by the Directed Research component and the two Centers to assess whether the original objectives have been met. The IGSM would carry out an external evaluation of the two Centers related to the project by the time of the mid- term review. The goal of this evaluation would be to review the structure and functions of the institutions related to the project and to determine the difficult issue of which research areas may need to be phased out given the overall mandate of the two institutions. The IGSM would consist of several members of the GEA (Grupo de Avaliacio do PADCI) and would add four eminent scientists (two Brazilian and two international) specializing in environmental sciences. AA neogtiaQns, agreement was reached that MCT will appoint highly qualified national and international scientists with expertise in natural, agricultural and social sciences to the IOSM to: (i) monitor and evaluate implementation progress every year; (b) carry out a review of the structure and functions of the two Centers; and (c) send to the Bank no later that March 31 of each year, beginning in 1995, a report with their findings (para. 45(g)). 31. The TS would track financial transactions and project information in an MIS (Management Information System) in use at MCT that is well adapted for the Directed Research program. The two Centers and grant recipients of the Directed Research program would submit progress reports bi-annually tracking physical and financial performance targets to the Financial Agent for transmission to and review by the TS. At neWQafoin, agreement was reached that copies of semi-annual progress reports will be sent to the Bank by March 31 and September 30 of each year, beginning September 30, 1994 (para. 45(h)). In addition, at negotiatin, agreement was reached that, one year after Grant effectiveness or after 60% of the funds are committed, whichever comes first, the Bank and the Technical Secretariat will jointly carry out a mid-term review of the project, at which time adjustments could be made to project design as necessary and as recommended by the IGSM, in order to allow the project to fulfill its objectives (para. 45(i)). Prior to the review, the Government will prepare a draft report that will be sent to members of the IGSM. The IGSM will specifically review and comment on the report and will also add its own recommendations. No less than one month before the mid-term review the Government will send to the Bank its report as well as the report of the IOSM. On the basis of this review the Government will revise the operational guidelines and the objectives and strategy of all the project's components, and will also reallocate funds. In addition, if funds are available and based on the project's progress toward meetg its objectives, Phase II of the project would be recommended. 32. Dissemination. The TS would be responsible for the dissemination of results of all project components. The general activities to be carried out are. (i) preparation of materials for disseminating the program during different stages of implementation, including the publication of the quarterly information bulletins already used under PADCT, which would be adapted for the Directed Research Program (PPD); and (ii) organization of workshops carried out by Directed Research Program participants and directed to the scientific community at large and to other interested sectors of society. 33. Procgrment. Procurement for the project would include civil works, scientific and laboratory equipment, computer equipment, transportation equipment and general office equipment and technical services (see Schedule B for a detailed description of procurement arrangements). Procurement for the Directed Research  14 component would be dispersed in time over the period of the project and would be implemented by different universities and research institutes, and carried out by a large number of researchers who would require equipment with particular specifications to meet the needs of their projects. For these reasons, packaging of procurement across sub-projects in the Directed Research component of the project would be difficult. 34. Civil works under the proposed project include very small and scattered works for two institutions geographically dispersed. As the largest single contract, for the construction of two new buildings at INPA (Manaus), is not expected to exceed US$1.2 million, it is unlikely that foreign contractors would be interested. Procurement of civil works would therefore be carried out as follows: (i) contracts above US$300,000 would be procured on the basis of Local Competitive Bidding (LCB) procedures acceptable to the Bank (the estimated aggregate Bank-financed amount is US$1,440,000); (ii) contracts under US$300,000 and not exceeding US$1,459,000 in aggregate, would be awarded through Local Shopping obtaining three quotations from any eligible contractors. Except for computer equipment, contract packages for goods are not expected to exceed US$250,000 and therefore are not large enough to attract foreign contractors through International Competitive Bidding procedures. Goods under the proposed project would be procured as follows: (i) computer equipment for INPA and MPEG (except for the sub-projects of the Directed Research component) would be procured in packages of not less than US$600,000 by each institution through Limited International Bidding (LIB) among manufacturers who have established maintenance and technical assistance services in Brazil and using Bank issued standard bidding documents; (ii) contracts for miscellaneous materials and supplies, books, dissemination products and publishing services expected to cost more than US$100,000 equivalent would be procured under LCB procedures acceptable to the Bank; (iii) miscellaneous scientific, transport and office equipment and materials and supplies which cannot be grouped in packages of more than US$100,000 each would be procured through shopping procedures acceptable to the Bank by obtaining three quotations from any eligible contractors (except for the sub-projects of the Directed Research component, estimated to cost the equivalent of $100,000 or less per contract, the estimated aggregate for scientific, transport and office equipment is US$800,000 and for materials and supplies is US$400,000). The procurement arrangements for the project are shown in Schedule B. Standard bidding documents acceptable to the Bank would be used for LCB procurement of works and goods. All LIB and LCB contracts for goods and works would be subject to prior Bank review of bidding documents, bid evaluation, award proposals and final contracts. Prior review is expected to cover about 56% of Bank- financed contracts for goods and works. The selection and appointment of consultants for studies, workshops, training and technical assistance would follow the Bank Guidelines for the Use of Consultants by the World Bank Borrower and the World Bank Executing Agency, dated August 1981. Selection of consultant firms valued at US$100,000 or more would be subject to prior Bank review (Terms of References, budgets, letter of invitation, evaluation and proposed contract). For individual consultants, prior Bank review (TOR, qualifications and conditions of employment) would be required for contracts valued at US$30,000 or more. Below these limits, Bank prior review would only apply to TORs. All the participating agencies (MCT, Financial Agent, INPA, MPEG) would have responsibility for ensuring the competitiveness, in terms of price and quality, of the items procured and their suitability for the purposes intended. INPA and MPEG will be assisted by SECOP,  1s CNPq and consultants, since their experience in procurement is limited. 35. Disbursements. The proceeds of the RFT Grant would be disbursed over a two-year period. The Bank signed a Trust Fund Agreement with the CEC on June 9, 1994 to administer the CEC Trust Fund (US$5.4 million equivalent). The RFT funds would disburse against 100% of eligible expenditures for civil works, goods, technical services and financial fees for the Science Centers component and administrative expenses of MCT. The CEC funds would disburse against 100% of the research sub- project expenditures and financial fees for the Directed Research component. The disbursement schedule for the RFT and CEC grants is shown in Schedule B (page 21). Grant funds would be disbursed against Statements of Expenditures (SOEs) for consultant services for firms whose contract value is below US$100,000, consultant services for individuals whose contract value is below US$30,000, contracts for goods valued below US$100,000, civil works contract valued below US$300,000 and for all administrative expenses. Suppc.-ting documentation for such expenditures would not be submitted to the Bank but would be made available for inspection by Bank supervision missions. All other disbursements will be made against fully documented withdrawal applications. 36. In order to ensure efficient and timely implementation of the project, Special Accounts (for RFTJ and CEC funds), with an initial deposit of US$850,000 and US$540,000 to be withdrawn from the RFT and CEC Grant Account respectively, would be established in US dollars at a commercial bank. Any interest earned with the proceeds of the Special Accounts would be credited in its entirety to the project and would be kept in a separate account. The two Centers would maintain separate accounts as well as the research sub-projects of the Directed Research component. Withdrawals from the Special Account would be supported by the required documentation or SOEs. The project is expected to be completed by September 30, 1996. 37. Auditine. The financial agent and the two Centers would maintain separate accounts for the project and would keep adequate records to reflect their operations and financial situation, in accordance with sound accounting principles applied consistently. The project as a whole, the two Centers, and the Special Accounts will be subject to an annual audit by independent auditors acceptable to the Bank. At negg.tiationa, agreement was reached that: (i) the project accounts will be audited annually by independent auditors acceptable to the Bank; (ii) the terms of reference for the auditors will include, inter alia, provision of a Management Letter, a separate opinion on the use of the Special Account and Statement of Expenses (SOEs) for the project accounts and Special accounts; (iii) copies of the auditor's report will be sent to the Bank within six months of the end of each fiscal year (para. 45j)). Project Sustainability 38. Science research investments in Brazil and particularly in the Amazon region, which remains poorly understood, will still be needed after thiS project. PADCT and the Directed Research component have strengthened and would continue to strengthen MCT to manage a grants program competitively and transparently. This institutional strengthening would allow MCT to attract future science investment projects or grants due to its enhanced efficiency. The long-term sustainability of the two research  16 Centers will be eahanced by diversification of funding sources, support for greater autonomy for the Centers and training staff in fundraising techniques, which would Increase their ability to attract outside funding after the project ends. Rationale for RFr Funding 39. One of the objectives of the Bank's Country Assistance Strategy for Brazil, discussed at the Board on June 29, 1993, is to identify ways to allow and encourage vigorous agricultural and industrial growth, while at the same time strengthening institutions and initiatives that will preserve the environment and reduce rural poverty. The Pilot Program's overall strategy is to demonstrate the feasibility of harmonizing economic and environmental objectives. Through its support of relevant Amazon research activities, the proposed project would improve the knowledge base needed for conservation of the Amazon rain forest along with the sustainable exploitation of its resources. As such, it is fully consistent both with the objectives of the Country Assistance Strategy as it applies to rural and rain forest areas and with the objectives of the Pilot Program. Innovative aspects of the proposed project include its focus on joint multidisciplinary research activities, coupled with institutional reforms and strengthening in two Amazon research Centers that would encourage among others, the decentralization of the organization and creation of incentives basing access to resources on demonstrated performance. Environmental Aspects 40. No significant negative environmental effects are expected. The project retains a "C" classification for environmental assessment purposes. Project Benefits 41. The project is expected to increase capacity in environmental sciences in the Amazon and in Brazil, improve the technological knowledge needed to utilize sustainably the resources from the rain forest, and to disseminate research results to environmental policy makers and educators in the region. The direct beneficiaries of the project would be researchers from universities or from private or public research institutions, and other users of science. The Science Centers component would provide a base in the Amazon from which to generate and disseminate knowledge on scientific issues in the region. By improving the basic infrastructure and equipment needed for scientific research, the Science Centers component would attract scientists from other regions or continents and advance needed knowledge. Risks 42. The major risk to the Directed Research component is that the research topics identified as priorities may not directly address the relevant issues of conservation and sustainable development in the Amazon region. In order to minimize this risk, procedures to establish research priorities over the duration of the project were agreed between the Bank and the Brazilian government. Research  17 priorities were evaluated at a workshop by CORPAM and supplemented by additional consultancies in light of the types of research being carried out now and the demand for research results by decision makers. The first call for proposals will be based on these priorities. These initial priorities will be re-evaluated based on the results of the first call for proposals, additional workshops and consultancies and will result in the second and third call for proposals. Another risk of the Directed Research component is that the program may suffer delays during Implementation due to a low demand. This has been the case in the Environmental Subprogram of PADCT II (para. 8) that has started slowly. From the original US$14.7 million, only US$4.8 million has been awarded. This risk would be minimized in the Directed Research component since it will start with a single call for proposals estimated at US$5.4 million and will be opened very widely to national and interational competitors in broader fields than PADCT 11, such as natural sciences, social sciences, geography, climatology, agricultural sciences, and mineral sciences. T'herefore, a low demand is not expected. 43. Tbe main risk for the Science Centers component is the lack of continuity in govermlnent funding. The proposed project minimizes this risk by supporting greater autonomy for the two Centers and by setting the stage for the establishment of long- term funding mechanisms (e.g. endowment funds or debt swap) that could protect the institution from funding uncertainties. As with all institutional strengthening projects, measuring progress can be difficult and may be overly subjective. The proposed design would include the definition of clear performance targets of project success that will guide discussion during annual review meetings.  18 m. AGREEMENTS REACHED AND RECOMMENDATION 44. Prior to negotiations, the Bank was informed that FINEP would be the financial agent for the Recipient (para. 27). 4S. At n,atiaons the Bank and the Government agreed that: (a) the first call for proposals will be issued thirty days after Grant effectiveness and if all the funds are not committed after the first call, a subsequent call for proposals satisfactory to the Bank will be issued six months after the first call has been closed (para. 21); (b) project implementation will be governed by the agreed Operational Manual (para. 22); (c) (i) the two institutions will maintain the development office and the scientific exchange and technical cooperation office with structure, functions and responsibilities satisfactory to the Bank and that the management and staff will be adequate in numbers and with adequate qualifications; (ii) MCT will maintain a TS with responsibilities, structure and functions satisfactory to the Bank and with management and staff in adequate numbers and with adequate qualifications; (iii) each Center will maintain a PIU with responsibilities, structure and functions satisfactory to the Bank and with management and !:tiff in adequate numbers and with adequate qualifications (para. 2V' and 29); (d) a plan for the maintenance of buildings and equipment at both Centers, acceptable to the Bank, will be prepared six months after Grant effectiveness and carried out during project implementadon (para. 24); (e) the procedures to evaluate staff performance at INPA and the Goeldi Museum will be defined within nine months from Grant effectiveness and adopted thereafter (para. 24); (t) project progress will be monitored against the performance targets specified in Annex6 (para. 29); (g) MCT will appoint highly qualified national and international scientists with expertise in natural, agricultural and social sciences to the International Group for Scientific Evaluation (IGSM) (para. 30); (h) copies of semi-annual progress reports will be sent to the Bank by March 31 and September 30 of each year, beginning September 30, 1994 (para. 31); (i) One year after grant signing, or after 60% of grant funds are  19 committed, whichever comes first, the Bank and the Government will jointly review progress in project implementation. Not less than one month before the mid-term review the Government will send to the Bank its report as well as the report of the IGSM (para. 31); and aj) (i) the project accounts will be audited annually by independent auditors acceptable to the Bank; (ii) the terms of reference for the auditors will Include, inter alia, provision of a Management Letter, a separate opinion on the use of the Special Account and Statement of Expenses (SOEs) for the project accounts and Special Accounts; and (iii) copies of the auditor ; report will be sent to the Bank within six months of the end of each fiscal year (para. 37). 46. Conditions of Grant effectiveness would be: (a) the signing of satisfactory agreements for project implementation between MMA, MCT and FINEP (para. 27); (b) the signing of satisfactory agreements between FINEP and INPA and between FINEP and MPEG (para. 27); and (c) the satisfactory establishment of the two Science Centers' Project Implementation Units (PIUs) (para. 29). 47. Recommendatio. I am satisfied that the proposed RFT grant would comply with Resolution 92-2 of the Bank's Executive Directors and recommend approval of the grant. Rainer B. Steckhan Director, Country Department I Latin America and the Caribbean Region Attachments Washington, D.C. June 27, 1994  20 Schedule A BRAZIL PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST SCIENCE CENTERS AND DIRECTED RESEARCH PROJECT-PHASE I Estimated Project Costs by Components US W000 equIvaln % Foran COMPONENTS Local Foreiun Total Excla A. Directed Research Research Sub-Projects 3,441 t,853 5294 35 Subtotal Directed Research 3.441 1,853 5294 B. Science Centers 1. INPA a. Institutional Strengthening 226 254 460 53 b. Research Infrastructure & Equipment 2109 1.349 3.458 39 c. Human Resources 248 280 529 53 d. Dissemination 131 74 204 36 e. Technical Assistance -ODA 0 387 387 100 . Project Implementation 100 100 200 50 Subtotal INPA 2814 2444 5.258 2. MPEG a. Institutional Strengthening 176 170 346 49 b. Research Infrastructure & Equipment 680 736 1.416 52 c. Human Resources 562 375 937 40 d. Dissemination 170 139 309 45 e. Technical Assistance -ODA 0 308 308 100 t. Project implementation 68 68 135 50 g. Policy Studies and Plans 145 0 145 0 Subtotal MPEG 1.801 1,795 3596 Administrative Expenses (MCT) 120 78 198 49 Financial Agent Fees (2% RFT & CEC) 273 0 273 49 TOTAL BASELINE COSTS 8.449 6,170 14619 Physical Contingencies 213 152 355 Price Contingencies 55 so 115 TOTAL PROJECT COSTS 3,717 6,382 U1,088  21 Schedule A BRAZIL PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST SCIENCE CENTERS AND DIRECTED RESEARCH PROJECT-PHASE I Components by Financiers (USS '000) equivalent Brazian RFT CEC ODA ovensnot Taail Amount Amount Amoutt Amourd Afmon A. Directed Research a. Research Sub-Projects 5,294 5,294 B. Science Centers 1. INPA a. Institutional Strengthening 480 480 b. Science Infrastructure & Equipment 3,458 3,458 c. Human Resources 529 529 d. Dissemination 204 204 e. Technical Assistance-ODA 387 387 f. Project Implementation 200 200 2. MPEG a. Institutional Strengthening 346 346 b. Research Infrastructure & Equipment 1,416 1,416 c. Human Resources 937 937 d. Dissemination 309 309 e. Technical Assistance - ODA 308 308 f. Project Implementation 135 135 g. Policy Studies and Plans 145 14S Administrative Expenses (MCT) 198 198 Financial Agent Fees (2% RFT & CEC) 167 106 273 Unallocated (Contingencies) 456 14 470 TOTAL DISBURSEMENT 8,500 5,400 709 480 15,089  22 Schedule B BRAZIL PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST SCIENCE CENTERS AND DIRECTED RESEARCH PROJECT-PHASE I Summary of Procurement Arrangements (US$ 000) equhralent TOTAL 1 2B EXPENDITURE CATEGORY UB LCB out NBF Amount 3 Civil Works - 1,440 1,459 - 2,899 (1,440) (1,459) (2.899) 4 Scientiric Equipment - - 565 585 (565) (565) 3 Transport Equipment - - 129 - 129 (129) (129) 3 Office Equipment - - 136 8 144 (136) (136) Electronic Equipment 1,342 - - 243 1,585 (1,342) (1,342) Materials, Supplies, Books, - 287 420 201 908 Dissemination Products and (287) (420) (707) Publishing Services Consulting Services - - 693 530 1,223 (693) (693) Training - - 1,269 191 1,460 (1,269) (1,269) Workshops - - 340 16 356 (340) (340) Research Sub-Projects Contract - - 5,294 5,294 Administrative Expenses (MCT) - 253 - 253 (253) (253) Financial Agent Fees - - 273 - 273 (167) (167) TOTAL ESTIMATED COSTS 1,342 1,727 10,831 1,189 15,089 (1,342) (1,727) (5,431) (8,500) 1. LIB a Limited International Bidding 2. LCB = Local Competitive Bidding 3. LS a Local Shopping 4.IS - Intemational Shopping 5. Consufltng services to be procured according to Bank guidelines 6. Non Bank Financed (Numbes In pathesis reflect RFT finncn) * Maamum grant for each sub-project Is US$150,000 per year and US$300,000 total  23 Schedule B BRAZIL PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST SCIENCE CENTERS AND DIRECTED RESEARCH PROJECT-PHASE I Summary of Disbursement Arrangements Category Amount Amount % of Expenditures from from RFT CEC (US$'OOO) (ECU'OO0) 1. Civil Works 100% a. INPA 1,974 b. MPEG 735 2. Goods 100% a. INPA 1,773 b. MPEG 974 3. Technical Services 100% (consulting, training workshops) a. INPA 924 b. MPEG 1,299 4. Research Sub-Projects 4,725 100% 5. Administrative Expenses 198 100% 6. Financial Agent Fees 167 95 100% of the RFT Grant or 100% of the CEO Grant as th oase may be 7. Unallocated 456 TOTAL 8,500 4,820 RFT Disbursement Schedule (US$'000) Bank FY 95 96 Annual 7.3 1.2 Cumulative 7.3 8.5 Extemal Funds Disbursement Schedule (US$'000) Bank FY 95 96 Annual 5.8 0.8 Cumulative 5.8 6.6  24 Schedule C BRAZIL PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FORESI SCIENCE CENTERS AND DIRECTED RESEARCH PROJECT-PHASE I ITMhTABLE OF KEY PROJECT PROCESSING EVENTS Time Taken to Prepare: 13 months (August 1992 to September 1993) Prepared By: National Institute for Amazon Research (INPA) Emilio Goeldi Museum of Para (MPEG) Ministry of Science and Technology (MCI) World Bank: Claudia Sobrevila, Land & Forest Management Team and Robert Kaplan. First Bank Mission: August 1992 Appraisal Mission Departure: September 1993 Date of Negotiations: June 1994 Planned Date of Effectiveness: July 1994 (expected) Summary Supervision Plan: Missions are planned for 4-6 month intervals to supervise progress. Technical expertise: institutional specialist, architect/engineer, science administrator, ecologist. One mission each year will be designed as an annual review, at which time the adequacy of the project strategy would be assessed and design modification agreed upon, if necessary.  25 BRAZIL PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST SCIENCE CENTERS AND DIRECTED RESEARCH PROJECT-PHASE I IV. TECHNICAL ANNEXES Annex 1 DESCRIPTION OF THE TWO INSTrIUTIONS Annex 2 DIRECTED RESEARCH COMPONENT - CALL FOR PROPOSALS Annex 3 SUMMARY OF THE OPERATIONAL MANUAL Annex 4 PROGRESS ON IMPLEMENTATION OF STRATEGIC PLANNING Annex 5 LONG-TERM STRATEGIC DEVELOPMENT OF THE SCIENCE CENTERS Annex 6 KEY PERFORMANCE TARGETS FOR MONITORING AND EVALUATION Annex 7 REPORTS AND DOCUMENTS IN PROJECT FILES Map IBRD No. 25520  26 Am 1 BRAZIL PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST SCIENCE CENTERS AND DIRECTED RESEARCH PROJECT-PHASE I Annex 1: DESCRIPTION OF THE TWO INSTITUTIONS The National Institute for Amazonian Research (INPA) The Brazilian Government founded the National Institute for Amazonian Research (INPA) in 1952 and installed it in Manaus in 1954, to coordinate scientific and technological research in the region. INPA reported directly to CNPq in the Ministry of Science and Technology (MCT), but since 1987, INPA left CNPq and started reporting directly to MCT. INPA was also endowed with some administrative and financial autonomy. INPA's main goal is to promote the conservation and sustainable use of Amazonian resources through scientific and technological research on the region's terrestrial and aquatic ecosystems. The institute maintains three campuses (Aleixo ! and II and V-8 campus) in Manaus, which house a library, herbarium, laboratories, zoological collections, and a data processing center. It also operates four biological reserves totalling 12,500 hectares, a tropical forestry and fruit culture experimental station of 21,000 hectares, and floating and regional research nuclei stations in Acre, Roraima, and Rondonia. Principal lines of research at the institute are: (i) protection and conservation of natural resources, (ii) social and health sciences, (iii) multiple use of Amazon soils, and (iv) technological uses for natural products. These lines of research have provided the basic knowledge essential fcr future use and conservation of the natural resources and genetic potential of the largest tropical humid forest in the world. Significant findings have been generated at INPA. To name a few: (a) soils in Central Amazonia are predominantly poor; most nutrients are contained in the forest biomass and not in the soils; (b) studies on plant defense substances in 100 species have revealed diverse natural products of potential use in human and veterinary medicine, and fungus and insect control; (c) INPA has been experimenting with new uses for rain forest products and suggesting technical applications to industry (i.e. pisciculture, forestry); and (d) research has demonstrated that the forest is responsible for recycling 50 percent of the rainfall of the Amazon basin. INPA also devotes considerable research effort to evaluating the social and ecological impacts of large development projects, principally in hydroelectrics, thermoelectrics, mining, and highway construction. The institute is organized into 13 departmnents: Botany, Ecology, Tropical Forestry, Aquatic Biology, Hydrometeorology, Ecology, Phytochemistry, Health Sciences, Agronomy, Wood Technology, Entomology, Aquaculture, Food Technology and Social Sciences. INPA maintains cooperation agreements with over 30 Brazi.ian institutions and 10 non-Brazilian institutions. Of INPA's 850 staff, 71 have doctorates and 118 have a master's degree. In the early 1960s, INPA undertook the first scientific expeditions to remote  27 Al12.x I parts of the Amazon with researchers from elsewhere in Brazil and from around the world. As a result of this and subsequent expeditions, INPA's plant collection, with 170,000 samples, holds 40 percent of all specimens collected in the Brazilian Amazon. INPA's irreplaceable collections also include 550,000 insects and 4,000 mammals, as well as significant numbers of reptiles, birds, fish, and microorganisms. These collections provide an invaluable service to Amazonian researchers from around the world. In the early 1970s INPA consolidated its physical and administrative infrastructure. Through an agreement with the University of Amazonas, INPA established a graduate degree program, first in Botany in 1973, and in later in Ecology, Entomology, and Freshwater Biology. Today, the institute offers graduate courses at the master's level in Forest Management, Chemistry of Natural Products, and Food Technology and Nutrition and at both the master's and doctorate levels in Botany, Freshwater Biology and Fishery, Ecology, and Entomology. INPA's graduate program has conferred over 200 master's and almost 30 Ph.D. degrees. The Emilio Goeldi Museum of Para (MPEG) MPEG was founded in Belem in 1866, by a group of local intellectuals who were motivated by their belief in the future of the Amazon and in the importance uf studying and cataloging its natural resources, geography, and natural and human history. Nearly 130 years later, MPEG continues to fulfill this historic mission. MPEG reports directly to CNPq in MCT. The objectives of MPEG are fourfold: (i) to inventory and evaluate the natural and cultural patrimony of the Amazon region, by studying its flora, fauna, rocks and minerals, indigenous groups, geography and history; (ii) to preserve and organize the knowledge acquired in scientific collections and databases; (iii) to disseminate the research findings and, through its exhibits, educate local people on the natural and cultural values of the region; and (iv) to contribute to the formulation of a sustainable development policy for the region. Since the 1970s the Museum has been pursuing research in areas affected by large civil engineering projects (such as construction of hydroelectric dams and highways), where it strives to gather information and form collections before the areas are irreversibly altered. In 1989, interested in a more holistic vision of the region and in the dynamics of the Amazonian ecosystems, the Museum created the Ecology Department, with programs in the Ecology of Natural Systems, Human Biology and Ecology, Paleoecology and Primatology. The Museum facilities are split between two sites. The historical site in the center of Beldm houses the zoological and botanical park, aquarium, library, museum exhibits, and a soil and water lab, as well as some of the academic departments. Other departments and the data processing facility are located on a second site in the outskirts of the city. The Museum is also establishing a research station on over 30,000 hectares in the Caxiuana National Forest, 400 kilometers west of Belem, and it has an ongoing research project on the ecology and natural resource management of the island of CombW, near Belem. The Museum has over 300 employees, of which 41 have doctorates or are registered in Ph.D. programs, and 37 have master's degrees or are registered in master's degree programs. Since 1895, scientists at the Goeldi Museum have carried out broad-ranging  28 Annex. and systematic inventories of the flora, fauna and ethnography of the Amazon region, subjects about which very little was known at the time. The Museum Herbarium, created in 1895, houses priceless samples, including specimens of flora of regions that are now deforested and duplicates of specimens that were destroyed in European museums during World War II, as well as more than 2,000 specimens representing the first scientific description of the species. The Museum's contribution in the field of zoology began in 1899 with a revision of the genera of social wasps of the New World, a classification still used today. Early studies on bees and pollination systems in the region are still cited, especially following the arrival of the Africanized bee in Amazonia. Field ornithology in Amazon i was founded at the Goeldi Museum and pioneering studies of nesting behavior of birds were carried out there. This early work forms the basis of current knowledge of native bird population dynamics in the region. The zoological collections contain irreplaceable documentation on areas that are today devastated or modified. The Museum has contributed greatly to the study of the social sciences in the region as well. Researchers at the Goeldi Museum have made notable contributions to anthropological theory through studies of cultural change and religion in Amazonia. The Museum's ethnographic collections of Amazonian Indian artifacts are some of the most important in the world, in particular because they document tribal groups which are today extinct or strongly modified by inter-ethnic contact. Contributions to linguistics began in 1877, when first contact was made with the last Arua Indian of Marajo Island and 200 words of that lal. ige were collected. Today the Goeldi Museum is an important research center for Amazonian languages. Archaeology studies also have a long tradition at the Museum. In the 1940s, scientists working with the Museum estahlished the first sequence of cultural development at the mouth of the Amazon, and in the 1970s a Museum research team discovered the oldest ceramics in Brazil at that time, which were also some of the oldest in all of South America.  29 Armex-I Table 1: Funding sources at INPA and MPEG during 1982 and 1991. (In thoumatds of US DoUan) (A) A 1M 19N2 Wm 1984119I51 I86 1971 198 1989 19901 1991 T9T Tummy 13U440 10,133 7,067 8,430 9,086 )6,422 22.301 21,344 30,321 12362 1509Q6 Se vie 839 1,271 1,579 765 663 904 238 11,90S 16 0 8,180 a 3,272 1,6S8 2,322 2.149 2,223 2,749 576 -.25 647 303 21,150 Togsa 17,i1 13.062 10,968 11,344 11.972 20,075 23,115 2800 2,494 12,665 180,236 (b) bowG Fw 1982 1983I19 198 S 1986 1987 j 1988 1989] 1990 J 1991 jTOAL T9ms 2,392 | 74 1,347 154 747 1,327 1257 3,26 2,387 709 15,420 Suas 45 44 1433 101 168 205 66 201 192 84 1,539 Gats 402 228 421 303 S s80 34s 1,309 163 1,943 2,494 8,188 Tota 2.839 1,846 2,201 | 58 1.495 1.8 2,632 3,890 2.494 3.287 25,147  30 h BRAZIL PILOT PROGRAM TO CONSERVE THE BRAZILfAN RAIN FORES1 SCIENCE CENTERS AND DIRECTED RESEARCH PROJECT Annex 2: DIRECTED RESEARCH COMPONENT - CALL FYOR PROPOSALS (Translated from Portuguese) A. GENERAL INFORMATION Notice The present call for proposals is part an integral application package for the Directed Research program that describes the general regulations and requirements that need to be met by all applicants. The application package includes: (a) call for proposals (described below); (b) Summary of the Operational Manual of the Directed Research Project; (c) Grant Application Form; and (d) Supplementary Guidelines to all for proposals (for documents mentioned in (b), (c) and (d), see project files list of AInx 7 . The call for proposals describes the priority themes that would be funded as well as the evaluation criteria to be using during the selection process. The Summary of the Operational Manual describes the structure and procedures of the Directed Research programn. The Grant Application Forms requests the biographical irformation and past experiences of applicants, institutional arrangements of the sub- projects and provides detailed guidelines for preparing proposals. The Supplementary Guidelines include information on the Pilot Program and other procedural aspects not included in item (b). Before preparing a research proposal, applicants need to read c-arefully all items of the above-mentioned documents. Non-compliance with any regulation or requirement contained in this call for proposals or the complementary documents will jeopardize the proposal, as stated in the respective topics. Deadlines Presentation of Proposals: Release of Results: Invitation The Ministry of Science and Technology - MCT and the Financial Agency for Studies and Projects - FINEP invite interested institutions to present proposals for research projects under the Directed Research Program, in accordance with regulations established in this call for proposals.  31 Annex2 Elgible Institutions The following institutions would be eligible for the research grants program: a) Research and development institutions headquartered in Brazil's Legal Amazon, or outside this region, as long as the proposals presented by the latter are conceived and executed jointly with institutions from Brazil's Legal Amazon; b) Categories of eligible institutions: - Teaching and Research Institutions; - Research and Development Institutions, Centers and Foundations; - Technical and Scientific Associations and Societies; - Related Agencies; - Public and Private Agencies; - Other legal public agencies belonging to federal, state and municipal governments; - Non-Governmental Research and Development Organizations; and - Consortia. Requirement for Applicants and Executing Agencies Applicants should fulfill all the requirements listed below. Non-compliance with any of the following items will cause proposals to be disqualified: a) currently be performing research and/or development work in areas related to the PPD; b) present the formal agreement for participation by each researcher involved in the proposed research, specifying their activities, responsibilities and how long they will work on the project; c) present documentation demonstrating the executing institution's legal status and, if necessary, that of associated executing institutions; d) present proof of up-to-date payments to Federal, State and Municipal Treasuries and to the Social Security Administration, in accordance with Art. 29 of Law 8.666 dated 6/21193. In the case of proposals to be carried out by more than one executing agency, the above requirements should be fulfilled by all participating institutions, with one of them being designated as the principal proponent. Propoal Requirements a) Presentation (i) All proposals should be presented in triplicate, be clearly legible, and include a filled out Grant Application Form and  32 Annex2 related documents; (ii) The detailed proposal (according to the schedule indicated on page of the Grant Application Form for the PPD) should be written in a clear, concise and precise style and should not exceed 100 (numbered) pages including appendices and annexes, typed or printed in double space. (iii) On the cover page of the Grant Application Form for the PPD, applicants should identify the specific call for which they are submitting their proposals, even if the subjects of the proposal fall into more than one specific call; and (iv) Research project proposals should be sent to the PPD Coordinating Unit, together with the document required by this call for proposals, within the specified deadline. Non-compliance with any of the items indicated above will cause the proposal to be disqualified. lt) Suitabilit (i) Demonstrate the proposal's relevar.ce with respect to mneeting the PPD's objectives; and (ii) Demonstrate clearly how the research objective meets the requirements of the specific call. wnICo (i) In organizing the work plan, demonstrate how to fulfill the objectives of multidisciplinarity, institutional integration and comprehensive treatment of issues to allow basic knowledge to be generated and to transfer and properly use it to promote sustainable development, in accordance with indications contained in the evaluation parameters explained in this call for proposals. Non-compliance with any of the items described above will cause the research project proposals to be disqualified. d) Budg (i) If proposals are submitted for research projects involving more. than one executing agency, the specific budgets for each executing agency must be attached, in addition to the overall budget (FUAP/PPD, page ), in accordance with the conditions established in the Supplementary Guidelines; and (ii) Expenses for items dealing with works and installations, and with permanent equipment and material, may not exceed 40%  33 AunZ2 of the proposal's ovrll budget. Non-compliance with any of the above items, as well as any digression from financial guidelines stated in the Supplementary Guidelines, will cause proposas to be disqualified.  34 Amn z2 B. DESCRIPTION OF SPECIFIC CALLS Call 01 Code: PPD 01.54-01 Scope: Generation of knowledge to understand the structure and function of Amazonian ecosystems and the effects of human actions on ecosystem processes. Subject Matter: See list below. Available Resources: US$2.1 million Value of Bids for Research Project: US$300,000124 months Required Form: FUAP/PPD Terms of References The proposals submitted in response to this specific call should have the objective of generating scientific knowledge on one or more of the following subjects: Subject Matter 01: Analysis of the Effects of Human Actions on Ecosystem Processes: Impacts of principal regional and global activities on the dynamics of ecosystem processes. 1. Effects on the bio-geo-chemical cycle. 2. Effects on the water cycle. 3. Effects on biodiversity. 4. Effects on the energy flow and the dynamics of gas exchange. Subject Matter 02: Studies on the structure and function of Amazonian ecosystems with respect to: 1. The bio-geo-chemical cycle. 2. The water cycle. 3. Biodiversity. 4. Ene,gy flow and the dynamics of gas exchange.  35 An=A 2 Call 02 Code: PPD 01/94-M02 Scope: Generation of scientific and technological knowledge applied to the sustainable use of Amazonian ecosystems. Subject Matter: See list below. Available Resources: US$2.1 million Value of Bids for Research Project: US$300,000/24 months Type of Operation: Institutional Support Required Form: FUAPIPPD Terms of References The proposals submitted in response to this specific call should have the objective of generating scientific and technological knowledge on one or more of the following subjects: Subject Matter 01: Use and/or Rehabilitation of Degraded Areas: Development and evaluation of technologies for monitoring, rehabilitation, management and industrial and commercial use of degraded areas, including the identification of environmental, political and socio-economic parameters for the application of new technologies. Subject Matter 02: Management of Native Forests and Agro-Forestry Systems: Development of forest management technologies for sustainable economic use. This includes wood and non-wood resources, wildlife and fish, as well as technologies for the development of agricultural/forest system. Subject Matter 03: Economic Use of Biodiversitv: Evaluation of the economic potential of biodiversity products to obtain bio- active substances for pharmacological and industrial use. Concrete actions and interactive multi-disciplinary and multi-institutional participation in the identification of plants and bio-active substances, chemical isolation, optimization of production, pharmacological evaluation, and extractive use and methodologies for the commercial exploitation of species of plants and micro-organisms in the Amazon Region to serve as a basis to obtain these products. Proposals should include studies to define the available variability of interesting species as well as activities for the collection, "ex situ" conservation and characterization of these species.  36 Call 03 Code: PPD 01/94-03 Soope: Socio-cultural Subject Matter: See list below. Available Resources: US$1.2 million Value of Bids for Research Project: US$300,000/24 months Type of Operation: Institutional Support Required Form: FUAP/PPD Terms of References: 'Me proposals submitted in response to this specific call should have the objective of generating scientific and technological knowledge on one or more of the following subjects: Subject Matter 01: Bio-Social Diversity: Evaluation of ethnic and cultural heritage, including collecting native peoples' knowledge of biological and non-biological diversity, use of forest resources, and identification and evaluation of interactions between human groups and the natural environment on the sustainability of production systems. Subject Matter 02: Helhk: Development of alternatives for controlling endemic diseases and epidemics at an individual and collective level.  37 C. PROPOSAL EVALUATION CRITERIA The merits of research proposals for projects submitted for the specific calls under this tender shall be judged according to the following criteria: Executing Agency: Suitability The Executing Agency shall perform a pre- evaluation to determine whether the proposal meets the pre-established subject priorities of this call for proposals. Proposals that do not meet the priorities should be accompanied by a technical opinion which justifies their elim.nation. Even so, these proposals should be sent to the Evaluation Commissions to confirm their pre- qualification. At least two ad hoc consultants will present opinions on each proposal classified during the pre-evaluation phase. Evaluation Commissions (EC) The Evaluation Commission shall evaluate each acceptable proposal, using the following specific criteria: a. Scientific Merit 1. Originality - research should be of an innovative nature and should increase new scientific knowledge, including up-to-date, state-of-the- art information on the subject matter to be researched, and should present clear statements to justify the need for the proposed research. 2. Coher Methodology - the methodological model should be of an experimt ital nature in keeping with the objective of the proposed research. 3. Staff Oualifications - the coordinator and his assistants should have suitable training (at graduate level in the case of the coordinator) and experience to carry out research using the proposed methodology. 4. Relevance - besides achieving the anticipated inherent results, research should also have the potential to facilitate the development of (new or improved) technologies contributing to the solution of relevant social- economic problems in the Amazon Region. 5. Institutional Suitability - the basic structure and previous experience of the executing institution should be suited to the scope of the research. b. Additional Criteria 1. A uate Budget. The budget should be accurate and cost-efficient for the purpose of carrying out the research activities within the proposed timetable. 2. Adeguate Timetable. The planned timetable for conclusion of research should allow anticipated results to be achieved. 3. Integration among various disciplines.  38 A C. Forms In order to make the process as objective as possible, the Evaluation Commission shall utilize a standard form to record, in a qualitative and quantitative manner, the evaluation of each research proposal. Each member of the Evaluation Commission shall fill out a separate form for each proposal evaluated and assign each item (see Part a and b above) a value between 1 and 5; this should be accompanied by relevant comments, if necessary. Another copy of the same form shall be used to incorporate each individual's notes In order to obtain a collective evaluation of the proposal being judged. d. Minutes of the Evaluation Commission Meeting In order to make the research proposal evaluation process as transparent as possible, the Evaluation Commission shall prepare minutes at the conclusion of its work. These minutes, which should be signed by all the Commission members, should contain the following information: 1. identification of activity (place, time, names of participants, purpose, etc.); 2. list of proposals according to evaluation notes obtained from the group; 3. recommendations, duly justified and based upon the list described above, on which research projects should be contracted by the executing agency; and 4. any other relevant comments. Proposal evaluations, filled out individually by each member of the Evaluation Commission, must be attached to these minutes, besides the member who wil consolidate the group's notes and opinion. These minutes, to be filed In the Coordinating Unit, may be consulted by World Bank supervision missions.  39 Am 3 BRAZIL PIWT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOQ' SCIENCE CENTERS AND DIRECTED RESEARCH PROJECT-PHASE i Annex 3: SUMMARY OF THE OPERATIONAL MANUAL A. GENERAL CHARACTERISTICS The Operational guidelines of the Directed Research program are contained in the Operational Manual (see project files list, Annex 7). The principles guiding the Directed Research Program are the following: (i) research projects shall be evaluated and selected by ad-hoc reviewers and by an independent Evaluation Commission (EC) composed of scientists; (ii) research awards shall be made on a competitive basis and will respond to established priorities (see Process for setting research priorities); (iii) qualified grantees shall include scientists from universities and other research institutions, both public and private, located in the Amazon. Additional grantees might include scientists from outside the region as long as they show proof of working in close collaboration with an Amazon-based institution; (iv) the Evaluation Commission (EC) and ad-hoc reviewers shall use a set of pre-established evaluation criteria based on scientific merit to select proposals and make recommendations; (v) the program shall enhance Amazon-based research capacity through local, national and international consortium arrangements; (vi) the program shall promote multidisciplinary approaches in research design; (vii) the program shall support participatory research projects that integrate research with natural resources users; and (viii) the program shall support the needed scientific information to implement other Pilot Program activities (e.g. demonstration projects, extractive reserves, etc.). Standard Forms During the implementation of PADCT, MCT has learned many lessons on how to administer a grants programs. The Ministry generated forms, models and documentation that will be very useful in maintaining continuity in the program and keeping the process transparent and efficient. The Operational Manual (see Annex 7, list of project documents) has incorporated as part of its annexes a series of standard forms and documents required at different stages of the project selection process, contracting and monitoring. These are: (i) a model for calls for proposals (editais) and complementary guidelines; Cii) grant application forms; (iii) forms to be filed out by the individual reviewer (ad-hoc or from the Evaluation Commission) when assessing the scientific merit and relevance of the proposal; (iv) general guidelines regarding the organization and operation of the Evaluation Commissions; (v) models of minutes (ata da reuniao) to be prepared by the chairman of the Evaluation Commission; and (vi) monitoring and evaluation form for awarded projects.  40 Annex3 Budget characteristics Individual grants would be limited to a maximum of US$150,000 a year. The research grants would finance equipment, materials and supplies, travel expenses for researchers and technicians (airfares and per diem), travel costs for visiting researchers, some form of scholarship ("bolsa'), contractual services and publication and other dissemination costs. Project Evaluation Criteria Evaluation Commissions (ECs), composed of highly qualified scientists, would use two main overall criteria for evaluating proposals and making recommendations: priority of the research and scientific merit. To assess whether a research proposal is a priority, the Evaluation Commissions would determine if the proposal fits one of the pre-established priorities mentioned in paragraph 19. To assess scientific merit, the following specific criteria would be used through a point system: (a) innovative character of the research; (b) sound methodology; (c) qualifications of applicants; (d) relevance of the research to development; (e) adequate infrastructure for the research proposed. In case the demand for funding and the quality of proposals is high, additional criteria could be used to rank highly meritorious proposals. These additional criteria are: (i) multidisciplinary approach in research design; (i) participatory research approach that responds to needs of natural resources users and disseminates information to users; (iii) support of other Pilot Program activities (e.g. demonstration projects, extractive reserves, etc.). N,. B. MAJOR AREAS FOR FUNDING The Directed Research program's priorities are to address the sustainable use and conservation of the rain forest in the Brazilian Legal Amazon. Priorities will include gaps in the research being carried out now and unmet demands for research results by natural resources users and decision makers. Four broad sub-programs have been identified: (i) Amazonian ecosystems' structum and function (e.g. impa of land use changes on ecosystem function, biodiversity assessments and conservation strategies); (ii) sustainable natural resource management (e.g. baseline studies on productivity of different land and water use systems, studies on new or traditionally used forest products with potential economic value); (iii) socio-econamic and cUtb Us= (e.g. cultural and social base for the sustainable use of Amazonian environment; impact of pollution on health); and (iv) low enviromnentaimpact infrastructure (e.g. adaptive research on renewable energies for direct use in the Amazon, studies on transport means with low environmental impact). For more details on the priorities, please see Annex 2. Process for setting research priorities Definition of :esearch priorities is a dynamic process that will be carried out over the duration of the project through various iterations and levels of refinement as more informaton and results of first testings of the Directed Research program become available. Initial research priorities were identified according to the four core  41 Annmex3 areas by public deliberation through a workshop by CORPAM. CORPAM is an independent commission of representatives from government, NGOs, private groups and universities. The CORPAM workshop was carried out in May 1993 and members of CORPAM deliberated, in small groups organized according to the four core areas, the research needs of the Amazon region at that workshop. This resulted in a list of research needs ranked in a first approximation of the order of importance as established by consensus of the participants. The deliberative process captured the breadth of experience, expertise and interests of the organizations represented by CORPAM and invited researchers anid ensured that they develop a sense of partnership in the Directed Research program. The results of the CORPAM workshop have been supplemented by additional consultancies with the workshop participants, other members of the scientific community and the Technical Secretariats of other Pilot Program Projects. Based on the results of the workshop and consultancies, a first call for proposals based on a clear assessment of research priorities has been approved by the Bank (see Annex L. These first research priorities will be revised for the second and third calls for proposals (when funds becor . available) and they would take into account new regional demands and needs from other Pilot Program projects. C. STRUCTURE OF THE DIRECTED RESEARCH PROGRAM Technical Secretariat (TS). The project imianagement unit or TS (called Technical Secretariat) would be under the overall coordination of the Secretariat of Program Coordination (SECOP) of MCT. The TS is headed by the Executive Secretary of SECOP and seconded by an adjunct Coordinator from the Support Coordination of Priority Programs (COAP). Both are appointed by the minister. The TS's main responsibilities would be to: (i) coordinate and supervise the implementation of all the components of the project according to the Bank Agreement and the Operational Manual; (ii) execute the Directed Research component of the project according to the Operational Manual; (iii) ensure that the recommendations of the Pilot Program International Advisory Group (TAG) and CORPAM are incorporated during project implementation and review; (tv) work in close collaboration with the Financial Agent for the project; (v) represent MCT in the Brazilian Pilot Program Coordinating Commission and report to them on progress to date; (vi) provide logistical support for the meetings of the different commissions involved in project implementation; (vii) prepare all documents required to run the Directed Research Program; (viii) control the flow of resources to all the intermediary agencies; (ix) prepare monitoring and evaluation reports on the basis of information provided by the Financial Agent, INPA, MPEG and the beneficiary institutions; (x) classify the proposals received and organize the Evaluation Commissions (ECs); and (xi) resolve 'ad-hoc" operational and administrative discrepancies with the Executing Institutions. The Technical Secretariat would be headed by a project manager to carry out the day-to-day work. The responsibilities of the project manager would be: (i) prepare and disseminate the calls for proposals and other dissemination materials; (ii) receive and classify the proposals responding to the calls; (iii) organize the ad-hoc  42 Annex3 review process and the Evaluation Commission; (iv) prepare biannual reports based on the information received by the Financial Agent and the two institutions; (v) maintain up-to-date information on the projects being awarded and contracted; (vi) organize CORPAM workshops to define the research priorities of the Directed Research Program; (vii) respond to requests for information on the Directed Research program; (viii) disseminate the program during all stages of its implementation, including the publication of the quarterly information bulletins (boletins informativos quadrimestrais); and (ix) ensure that standard bidding documents for purchase of equipments and civil works by the beneficiary institutions and provide these documents for use by the Financial Agent. Evaluation Commission (EC) The Evaluation Commission would be composed of: (i) a chairman and 5 scientists nominated by the Secretary of the TS with the support of CORPAM; (ii) one representative from the TS; and (iii) one representative of the Financial Agent. Due to the multidisciplinary nature of the Directed Research program, the ECs should comprise a multidisciplinary panel. The ECs assess and make recommendations on project proposals to be contracted and financed through the Financial Agent. The ECs evaluate the proposals based on a set of established criteria that would have been explicit in the calls for proposals and following several guidelines (see Annex 2). Minutes of the meeting will be written by the chairman and the TS representative. After a decision has been made on which proposals to fund, the ECs will inform applicants of the non-selected proposals (through a written statement) of the reasons supporting its judgments. Financial Agent The Financial Agent will be responsible for: (i) preparation of contracts for the awarded research projects; (ii) monitoring of their technical and financial execution; (iii) preparation of monthly financial reports for the TS including: (a) contracted projects; (b) start-up and completion dates; (c) local and international costs incurred; (d) disbursements made; (e) balance; and (iv) preparation of reports every semester on: (a) accomplishment of goals; (b) results obtained; and (c) difficulties encountered. The Financial Agent would also assist the TS in: (1) preparing the calls for proposals; and (2) supporting the organization of the EC's meeting and participating in them. In order to avoid the implementation difficulties identified in PADCT II supervisions and the Mid-Term Review mission, the legal agreements between MMA, MCT and the Financial Agent would incorporate the following principles and provisions: (a) a clear schedule for contracting and disbursing funds from the Financial Agent to the beneficiary; (b) a clear definition of the role of the FinanciU Agent in providing guidance to beneficiaries in the preparation of financia reports (prestacao de conta) and in the procurement process, including the responsibility to provide grantees with project-specific ICB and LCB bidding documents (editais de concorrencia publica) to be based on the ones used under PADCT-1I; (c) the right of MCT and/or the Financial Agent to cancel ("denunciar") the agreements; (d) the right to impose penalties, when necessary; and (e) an innovative formula to avoid inflation-related devaluation of funds.  43 Amex 3 Regional Commission for Research in the Amazon (COIRPAM) CORPAM was created on July 10, 1989 (Law 8896) to advise MCT in the definition of general directives and strategies to enhance scientific and technological development in the Amazon. CORPAM is an independent commission comprised of representatives from EMBRAPA, SUDAM (Superintendency for the Development of Amazonia), INPA (National Institute for Amazon Research), CNPq (Council for Scientific and Technological Development), FINEP (Agency for Financing of Studies and Projects), IBAMA (Brazilian Institute for the Environment and Renewable Natural Resources), non-governmental organizations (NGOs), private groups, and universities. Under the Directed Research Program, CORPAM would: (i) prepare programmatic documents defining research priorities of the Directed Research component; (ii) provide names of reputable researchers that could serve on the Evaluation Commission; (iii) advise on programinatic changes of the Directed Research component proposed by the TS; (iv) disseminate the call for proposals and the results extensively in the region. International Group for Scientific Monitoring (IGSM) The involvement of Brazilian and internationally recognized scientists at the project and advisory levels would provide credibility within the international scientific community and facilitate leverage of project resources with funds from other sources. An International Group for Scientific Monitoring (IGSM) would be established to assess the program independently. The IOSM would be responsible for carrying out an independent evaluation of tne Science Centers and Directed Research Project. The IGSM would meet annually and would submit to the Technical Secretariat detailed evaluation reports of the components of the project and the impact of the investments in the Amazon Region. The IGSM would also be responsible for visiting a sample of research projects funded by the Directed Research component and the two Centers, in order to assess whether the original objectives have been met. The membership of IGSM would consist of several members of the GEA (Evaluation Group of PADCT) and would add four eminent scientists (two Brazilian and two international) specializing in environmental sciences. D. ALLOCATION AMONG THEMATIC AREAS IN THE FIRST CALL FOOR PROPOSALS The budget allocation among different thematic areas will be as follows: (i) Amazonian Ecosystems Structure and Function US$ 2.1 million (ii) Sustainable Natural Resource Management US$ 2.1 million (iii) Socio-economic and Cultural Systems US$ 1.2 million  44 Annec 3 E. DONOR COORDINATION DURING PROJECT IMPLEMENTATION Several bilateral and international agencies are active in scientific research activities in Brazil. Donor coordination is not systematic and needs to be enhanced. The different forms of bilateral cooperation existing in Brazil include: (i) Technical Cooperation (through ABC/MRE); (ii) Scientific and Technological Cooperations (through DCTEC/MRE and CNPq); (iii) Financial Cooperation (through SEAIN) and; (iv) Institutional Cooperation (direct to institutions; Canada is the only case). The Secretary of Program Coordination (SECOP) in the Ministry of Science and Technology would execute directly new funds committed and pledge before appraisal to the program and would ensure donor coordination for other forms of cooperation during the implementation of the Directed Research component. Direct Execution The Directed Research component is based on the availability of a core of US$5.7 million of new funds during Phase I. These funds would come from the Rain Forest Trust Fund and from Bilateral Financial Cooperation (directly or through the Bank). Under this financial arrangement, the funds would be managed directly by MCT as a grants program and through its calls for proposals similar to that operated under the on-going PADCT. Coordination for Non-Filnandal Cooperation Other forms of non-financial bilateral cooperation could support the Directed Research Program. Non-financial bilateral cooperation has the following characteristics in relation to the Directed Research project: (i) the requirements that will be written in the call for proposals are incompatible with the bilateral cooperation's requirements. This makes it impossible for most bilateral projects to compete in the grant program; (ii) the categories of budget items to be funded under bilateral projects is very different from those that will be in place for the Directed Research; and (iii) many bilateral projects have already been selected and this takes away the spirit of truly open international competition. The non-financial bilateral projects would enter in the Directed Research in the following way: (i) bilateral projects follow the normal rules and regulations of the Brazilian agencies in charge of bilateral cooperation (ABC/MRE, DCTEC/MRE); (ii) simultaneously, new project candidates for the Directed Research coordination would be submitted to the same coordinating unit of the Directed Research that will receive the proposals in response to the "editais" (call for proposals). These new projects would be subject to an evaluation; (iii) the evaluation criteria would be different from evaluation criteria of the other bilateral cooperation agencies and would consist of: (a) degree of scientific merit; and (b) integration within the policy framework of the Directed Research program. That is, they respond to research priorities established by MCT and CORPAM; and (iv) those projects that are approved are counted as part of the Directed Research project. This type of contribution could enhance coordination among donors and Brazilian research institutions. Use of the Directed Research component as a clearing house and prime mechanism to channel support to directed research could avoid unnecessary duplication of research efforts and enhance cost- effectiveness.  45 AmB4 BRAZIL PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST SCIENCE CENTERS AND DIRECTED RESEARCH PROJECT-PHASE I Annex 4: PROGRESS ON IMPLEMENTATION OF STRATEGIC PLANNING A. BACKGROUND The Need for Strategic Planning In May 1992, in response to a request from the Brazilian government, the US National Research Council of the National Academy of Sciences selected a Scientific Advisory Group to assist the Brazilian government with an assessment of INPA and MPEG and to identify actions and needs for developing these institutions as model Science Centers in the Amazon region. The major deficiencies found by the Advisory Group were: (i) lack of clear institutional guidelines and focused research goals; (ii) low salaries and exodus of the most qualified staff; (iii) lack of efficiency in research administration; (iv) lack of coordination with other institutions; (v) deteriorated infrastructure and lack of facilities for field research; (vi) lack of necessary equipment; and (vii) lack of a performance evaluation system. The Advisory Group recommended that the two Centers undertake through a strategic planning exercise to address some of these deficiencies and strengthen the institutions. In February 1993, during a technical visit to Washington by representatives of the Brazilian government, the terms of reference for a strategic planning exercise for the two Centers were approved as a pre-investment study. The overall objectives of the strategic planning exercise would be to establish and define: (i) general institutional guidelines; (ii) broad thematic areas for research; and (iii) administrative and institutional mechanisms to transform the institutions into Centers of Excellence. During this visit, the Brazilian and Bank team agreed that because a strategic planning process can take a very long time, only the most critical outputs would be expected for appraisal. These critical outputs were: (a) a clear definition of the institutional mission, objectives and research agenda; and (b) definition of an evaluation system for the institution and its staff. The strategic planning exercise for the two institutions was initiated on March 1, 1993. Preliminary results of this exercise were presented to a Bank mission in May 1993. At that stage of the exercise, since few of the outputs were ready, the Bank mission was able to review information on the process and methodology being used. During the appraisal mission, the preliminary results of the planning exercise were presented by the Brazilian counterpart officials and their consultants and were evaluated by the appraisal team. The following sections present a brief description of the methodology used, and outputs of the strategic planning, as well as the appraisal team's assessment of the exercise. In addition, new information on the strategic planning exercise of INPA are also incorporated into the next sections.  46 Amex4 Methodology The methodology selected for the strategic planning exercise was participatory and systematic and sought to integrate studies describing regional issues with an internal analysis of the institutions including a careful examination of the internal organizational structure. In addition, the strategic planning process was carried out in such a way as to ensure continued long-term strategic planning processes in the institutions. The details of the methodology are presented in Figure 1. To initiate the planning process, each institution established a planning group. INPA's planning group consisted of 13 department heads and 27 researchers and informal leaders. MPEG's planning group consisted of a total of 30 staff, including department heads, researchers and informal leaders. Then, each institution organized different task forces (i.e. scenarios, sectoral needs analysis, internal institutional diagnostic, research priorities and production system needs). A larger number of staff were involved in the internal diagnostic questionnaire (i.e. 311 participants at INPA). B. PRESENT STATUS During the appraisal mission, the two institutions, assisted by two consultants, presented progress to date on the strategic planning exercise. Progress had been made on the identification of the mission, external scenarios and their implications for the two Centers, institutional objectives, research priorities and internat diagnostic. The main results of the strategic planning process are presented below, except for INPA which included the results presented into their recently completed finl report. Mission Statements ENA To generate, promote and disseminate scientific and technological knowledge about the Amazon for the conservation of the environment and sustainable development of its natural resources, principally in benefit of the regional population. MPEG To produce and disseminate scientific knowledge and collections related to the natural and socio-culturat systems of the Amazon region. External Scenarios The two Centers identified three different scenarios that pose different externa situations likely to occur over the ten next years and to determine appropriate proactive institutional strategies for each scenario. The three scenarios can be summarized as follows: 1. Rapid expansion of the economic frontier with non-sustainable exploitation of natural resources. 2. Pockets of predatory extractivism co-existing with sustainable  47 Annex4 development on a localized basis. 3. Sustainable development for an improved quality of life without degradation of the environment. Implications of Scenarios The two Centers determined the most important implications of these scenarios for their priority actions. for IPA 1. Diversification of funding sources. 2. Emphasis on applied and technological research. 3. Recommended multidisciplinary research. 4. Increased multi-institutional projects and coordination. 5. Improved interaction with technology users. 6. Improved planning, flexibility and objectivity. for MPEG 1. Increased multidisciplinary and inter-institution projects. 2. Improved and intensified dissemination strategies. 3. Creation of a science and technology reference center. 4. Intensified biodiversity research and conservation strategy. 5. Attraction of highly qualified researchers to the region. 6. Increased international financial and scientific resources. Strategic Institutional Objectives The next step in tic 3trategic planning process was to identify the general objectives that the institutions intend to pursue in order to fulfill their mission. Figures 2 and 3 present the objectives for INPA and MPEG in a hierarchical way. The objectives listed first (1-5) represent the broader goals, while the rest of the objectives support the fulfillment of the broader goals in the day-to-day activities. Internal Diagnostic The internal diagnostic is a critical stage in the strategic exercise since it identifies the strengths and weaknesses of the institutions and allows them to strategize based on this information. The internal diagnostic at INPA consisted of several internal analyses: (i) research projects; (ii) scientific production; and (iii) administration and management. The internal diagnostic at MPEG focused more on the administrative management analysis (as presented in the interim report). Figures 4 and S present In a schematic way the results of the internal diagnostic at INPA and MPEG. Priority Research in the Two Centers INPA and MPEG staff identified priority lines of research based on the result of the analysis of external scenarios, internal diagnostic and objectives of the institutions. The identified research priorities do not correspond exactly with existing  48 Amex4 departnents. INPA 1. Taxonomy, evolution and biogeography of flora and fauna. 2. Biology and ecology of flora and fauna. 3. Meteorology and biogeochemical and hydrological cycles. 4. Tropical silviculture for sustainable forestry. S. Limnology. 6. Fisheries resource management. 7. Rural production systems of the Amazon and the management of genetic resources. 8. Chemistry of natural products. 9. Technology of forest products. 10. Aquaculture. 11. Food technology. 12. Health and nutrition. 13. Environmnental impacts of anthropic actions. 14. Human ecology and social sciences. 15. Rehabilitation of degraded areas. 16. Wildlife management. MPEG 1. Taxonomy, inventory and analysis of biodiversity. 2. Origin and dynamics, management and conservation of natural systems of the Amazon. 3. Use and economic value of biodiversity. 4. Interface between ecological processes and human social systems. 5. Multi-cultural formation of pre-historic Amazon. 6. Dynamics and impacts of social change as a result of the contemporary occupation process of the Amazon. 7. Ethnological diversity. 8. Traditional cultures. New Structure at INPA INPA now has 13 research departments, organized classically along lines of discipline (agronomy, ecology, silviculture, sociology, etc.) Ihe structure proposed as a result of the strategic planning exercise is to create six research programs: * Biodiversity and environmental conditions of the Amazon basin * Neotropical biology and ecology * Management and use of natural resources of the Amazon forests * Systems of rural production O Human populations and the Amazon environment * Climatology and water resources Each of these six programs would have a coordinating unit, whose responsibilities would include identifying key research problems and questions; articulading research relevant to their solution; developing funding sources; coordinating research projects; and disseminating results. Each program would be  49 Annex 4 strongly focused toward human needs in the region, and would promote innovative technology and multidisciplinary, multi-institutional efforts. There would be efforts to identify the major beneficiaries and users of research, and to orient programs to their needs. This new structure would not entirely replace the existing disciplinary hierarchy. Rather, it would be a "progressive transformation' which would promote a "horizontal" integration of the various disciplines and departments, while allowing the classic "vertical" structure to remain in key departments. Maintaining a balance between the horizontal and vertical lines would be pursued during the transition period. C. CONCLUSIONS AND RECOMMENDATIONS The two institutions initiated a participatory process in which formal and informal leaders, as well as employees in general, could take part in defining strategic projects to move the institutions toward becoming Centers of Excellence. The definition of Center of Excellence by the strategic planning staff included the notion that a Center of Excellence has to have strong impact on both knowledge and social change. The strategic planning took place in a difficult context - many years of scarce financial resources, exodus of highly qualified staff and internal institutional conflicts - and achieved in a short period of time a commitment to planning by a large majority of employees that was not previously present. The methodology was more or less standard practice for the discipline of strategic planning. That is, there were clear attempts to define the mission, analyze the external and internal conditions, and select "strategic" program activities. Task forces were created to analyze specific sectors and create project plans. During this initial process of strategic planning, lessons were learned rapidly which can be incorporated into successive planning processes. TMe following are some of the most important lessons learned and recommended future developments. External Evaluations INPA and MPEG have followed essentially identical processes of strategic planning, with somewhat different results. The difference is probably due to the fact that more outside institutional evaluations were available for INPA, which facilitated the strategic process by providing up-dated information. For example, the Ministry of Science and Technology, through "Portaria" No. 475, constituted a High-level Commission to develop a strategy to strengthen INPA. The study "O INPA como Centro de Excelencia em Pesquisas na Amazonia" was published in January 1993 and included a review of the quality of work of INPA's research departments. Two departments - Ecology and Aquatic Biology - stood out for their high quality. This information was used in the internal diagnostic step of the strategic planning. Significantly, INPA has decided to concentrate on strengthening these two departments as part of its strategy to reestablish INPA as a Center of Excellence. This type of information seems to have been less available for MPEG since their internal diagnostic focused more strongly on administrative and managerial analyses. Institutional evaluations by outside commissions (as was done for INPA) would provide the right type of information and diagnostic analyses to proceed more easily to prioritizing activities in an institution through a strategic planning exercise.  50 Annex4 Participation It is a fundamental principle of strategic planning that the process does not proceed until key players are all committed to the planning exercise. The definition of key players should include representatives from all the different functions of the institution (research, administration, dissemination, etc..). In a research institution such as INPA and MPEG, it is critical to seek the views of highly qualified researchers during certain stages of the strategic planning exercise (i.e. definition of research priorities, staff, project and institutional evaluation, international cooperation strategies). The consultation of research priorities could also be enhanced if it is done by outside experts that could provide a larger context of the institutional vision. These consultations would not only ensure that a scientific vision is kept, but it would also help ensure that administration services and functions will support scientific development and not impede it. Scientific Strategy During the steps of the strategic planning process, the external scenarios were identified, which led to a series of conclusions about the importance of multidisciplinary and applied research. Normally this phase of planning should review specific opportunities for achievement, and should identify the institution's competitive position relative to others who might carry out similar programs. The institution would then proceed with programs where its competitive position was strong, and decide to abandon or strengthen areas of weakness. This method recognizes that there is a limit to the number of areas in which a single institution can achieve excellence and success, especially when financial resources are quite limited. Both institutions have adopted an initial scientific strategy for the project that focuses on areas where each is stronger, and on priority areas identified in the Directed Research Program. The institution's competitive position with respect to other institutions has not yet been analyzed in great detail. This has resulted in the fact that, at this time, the two institutions have not addressed the difficult issue of determining which research areas may need to be phased out given the overall mandate of the two Centers. This analysis and a subsequent decision by each Center is sufficiently important that it would be completed before subsequent support to scientific research is initiated. As a continuation of the strategic planning exercise, the two institutions would carry out an external evaluation study to determine the difficult issue of which research areas may need to be phased out given the overall mandate of the two institutions. MCT would coordinate external institutional evaluations for each Center by the time of the mid-term review and the results and actions from these evaluations would be taken prior to appraisal of a Phase 11 of the project.  0~~~~~~~I~ ~ X1 E~~~~~~~~~~-C '3 1 X " VII Z.I A S = W S . : S!